Overseas clams on India up $11.2 bn at $352.7 bn as of end-March 2021
02 July 2021
Net claims of non-residents on India increased by $11.2 billion during the fourth quarter of fiscal 2020-21 to $352.7 billion as of end-March 2021. This was due largely to increase in foreign-owned assets in India ($17.9 billion) vis-à-vis the overseas financial assets of Indian residents ($6.7 billion) during the quarter, figures released by the Reserve Bank of India showed.
Indian residents’ overseas financial assets increased largely on the back the increase in overseas direct investment as well as currency and deposits.
Inward portfolio investment and loans were major contributors to the rise in India’s foreign liabilities.
Depreciation of the Indian rupee against the US dollar during the quarter also contributed to changes in India’s liabilities, when valued in the US dollar terms.
Reserve assets accounted for over two-thirds of India’s international financial assets while non-debt liabilities constituted 52.4 per cent of India’s external liabilities.
During fiscal 2020-21, non-residents’ net claims on India decreased by $22.7 billion as increase in overseas assets of Indian residents ($141.2 billion) exceeded the rise in foreign owned assets in India ($118.5 billion).
The increase in international financial assets of Indian residents was led by a large accretion of $99.2 billion in reserve assets; overseas direct investment and currency and deposits were the other major components.
Inward direct investment and portfolio equity investment together accounted for nearly 90 per cent of the increase in international financial liabilities during 2020-21.
The ratio of India’s international financial assets to international financial liabilities increased to 70.9 per cent in March 2021 from 65.6 per cent a year ago.
The ratios of reserve assets, Indian residents’ overseas financial assets and claims of non-residents on India to GDP at current market prices surged during 2020-21, largely due to the decline in GDP during the year, caused by the Wuhan virus pandemic.
The ratio of net IIP of India to GDP also improved to (-) 13.1 per cent in March 2021 from (-) 13.9 per cent a year ago.