MUMBAI: The country’s external balances from an investment perspective has improved in the December 2023 quarter with net claims of non-residents on the country declining sharply by USD12.2 billion to USD 370.4 billion sequentially, but only inched down by USD2.8 billion on-year basis, shows the latest Reserve Bank data.
A positive balance shows that more resident Indians invested more money in overseas assets than non-residents doing the same in local assets here.
According to the latest international investment position (IIP) of the country, the steep decline in net claims of non-residents is primarily due to rise in reserve assets, which have soared by USD 34.8 billion in the reporting period. This surge in reserve assets constitutes over 85 percent of the increase in foreign assets held by Indians.
According to the central bank, another reason is the substantial surge in resident Indians’ overseas financial assets, amounting to USD 40.7 billion, outpacing the increase in foreign-owned assets within the country which stood at USD 28.5 billion.
On the flip side, the country continued to see a rise in foreign liabilities, due to the heightened inward direct investments, portfolio investments, and loans acquired by resident entities. Also, despite a marginal decline in trade credits, the influx of overseas investments and loans has led to an upswing in foreign liabilities.
As a percentage, reserve assets account for 63.9 of the country’s international financial assets, while the share of debt liabilities in the overall external liabilities has remained consistent, maintaining its position at 50.4.
Also, there has been an improvement in the ratio of the country’s international financial assets to international financial liabilities, which rose to 72.4 by December 2023, up from 70.9 in September 2023, reflecting a more favourable balance between assets and liabilities.
