India's International Investment Position Shows Marginal Rise in Non-Resident Claims

 The Reserve Bank of India recently unveiled India's International Investment Position data for the period ending September 2023. The report reveals that net claims of non-residents on India experienced a slight uptick during Q2:2023-24, reaching US$ 380.9 billion by September 2023.

Asset Dynamics

Foreign-owned financial assets in India witnessed a more substantial surge, recording an increase of US$ 7.4 billion, surpassing the rise in Indian residents’ overseas financial assets, which stood at US$ 6.0 billion. This shift led to the escalation in net claims of non-residents.

Changes in Resident Foreign Assets

Indian residents' foreign assets demonstrated growth in the July-September 2023 period, primarily attributed to an increase in currency and deposits, along with overseas direct investments. However, there was a decline in reserve assets and loans during this quarter.

Liability Dynamics

Although direct investment liabilities saw a reduction, India's total foreign liabilities rose in Q2:2023-24 due to an increase in portfolio and other investments. Debt liabilities accounted for a slightly higher share, rising to 50.3% in September 2023 compared to 49.8% a year earlier.

Assets Composition and Exchange Rate Impact

Reserve assets constituted 63.0% of India’s international financial assets by end-September 2023. The fluctuation in the Indian rupee's exchange rate against other currencies notably influenced the change in liabilities when assessed in US dollar terms.

Improving Financial Ratios

India’s international financial assets compared to liabilities improved to 71.0% by September 2023, marking an improvement from 68.7% a year ago. The ratio of non-debt liabilities slightly decreased to 49.7%.

The release of this data signifies a comprehensive overview of India's global financial standing, showcasing the intricate balance between assets and liabilities, reflecting the country's position in the international economic landscape.