Net claims of non-residents on India decline to $367.8 billion in March

Indian residents’ overseas financial assets increased by $27.1 billion during the quarter, which was higher than the rise in foreign-owned assets in India ($21.4 billion) and led to the decline in net claims of non-residents.

Reserve assets increased for the second successive quarter and accounted for 64.1 per cent of India’s international financial assets in March 2023.

The rise in foreign liabilities during the quarter was led by the increase in direct investment, loans as well as currency and deposits.

Debt and non-debt liabilities continued to account for nearly equal share in total external liabilities.

The ratio of India’s international assets to international liabilities increased marginally to 71.1 per cent in March 2023 from 70.1 per cent a quarter ago.

India’s external liabilities and assets both declined during the financial year 2022-23. However, a higher decline in assets led to a rise in net claims of non-residents.

Total overseas financial assets of residents declined during the year as the reduction in reserve assets, and currency and deposits exceeded the rise in overseas direct investment and trade credit.

Portfolio investment outflows (net) was the primary driver of the fall in foreign liabilities during the year.

Variation in the exchange rate of rupee vis-a-vis other currencies impacted the change in liabilities, when valued in US dollar terms.

The share of debt liabilities in total external liabilities increased to 50.2 per cent in March 2023 from 49.1 per cent a year earlier (Table 4).

As a ratio to GDP (at current market prices), India’s reserve assets, residents’ overseas financial assets as well as claims of non-residents on India declined during 2022-23 (Table 2).

The ratio of net claims of non-residents on India to GDP stood at (-)11.2 per cent in March 2023 as compared with (-)11.7 per cent a year ago and (-)13.2 per cent two years ago.