Indian residents’ foreign assets increased by $6 billion in July-September 2023 due to the rise in currency and deposits as well as overseas direct investment, even though reserve assets and loans declined during the quarter, according to data released by the Reserve Bank of India.
Net claims of non-residents rose marginally during the second quarter of FY24 to $380.9 billion in September 2023. Foreign-owned financial assets in India recorded higher increase ($7.4 billion) vis-à-vis Indian residents’ overseas financial assets ($6.0 billion), which led to the increase in net claims of non-residents.
Despite some reduction in direct investment liabilities, India’s total foreign liabilities rose in Q2 due to increase in portfolio and other investments. Reserve assets accounted for 63per cent of India’s international financial assets at September-end.
Variation in the exchange rate of the Indian rupee vis-à-vis other currencies impacted the change in liabilities when valued in US dollar terms. The ratio of India’s international financial assets to international financial liabilities improved to 71 per cent in September 2023 (68.7 per cent a year ago).
The share of debt liabilities in total external liabilities rose marginally to 50.3 per cent in September 2023 (49.8 per cent a year ago