The Reserve Bank of India (RBI) disclosed the latest figures concerning India's International Investment Position (IIP) as of December 2023 showing a decline in net claims of non-residents on India, plunging by USD 12.2 billion during the period from October to December 2023, culminating at USD 370.4 billion by the end of December 2023. A contributor to this shift is the rise in reserve assets, soaring by USD 34.8 billion during the third quarter of 2023-24.
Decline in Net Claims of Non-Residents on India
According to Reserve Bank of India, this dip in net claims is primarily attributed to a substantial surge in Indian residents' overseas financial assets, amounting to USD 40.7 billion, outpacing the increase in foreign-owned assets within India, which stood at USD 28.5 billion.
This surge in reserve assets constitutes over 85 per cent of the increase in foreign assets held by Indian residents, underscoring the importance of reserves in bolstering India's financial position on the global stage.
On the flip side, India witnessed a rise in foreign liabilities, propelled by heightened inward direct investments, portfolio investments, and loans acquired by resident entities.
Despite a marginal decline in trade credits, the influx of investments and loans from abroad has contributed to the upswing in India's foreign liabilities.
According to the data provided, reserve assets account for a substantial portion of India's international financial assets, making up 63.9 per cent of the total.
Rise in Foreign Liabilities
Meanwhile, the share of debt liabilities in the country's external liabilities has remained consistent, maintaining its position at 50.4 per cent.
One of the trends showcased in the report is the improvement in the ratio of India's international financial assets to international financial liabilities, which rose to 72.4 per cent by December 2023, up from 70.9 per cent in the previous quarter.
This uptick reflects a more favourable balance between assets and liabilities in India's international financial dealings.
The latest figures on India's International Investment Position paint a picture of dynamic shifts in the country's financial landscape, with reserves playing a pivotal role in bolstering its position amidst evolving global economic dynamics.
