India saw an uptick in the number of foreign-owned assets to the tune of $17.9 billion in the 4th quarter of the fiscal year 2020-21, while Indian residents’ foreign liabilities stood at $6.7 billion during the same period, India Investment Position (IIP) report reveals.
The report also pointed out that Indian residents’ foreign financial assets overseas also grew due to their foreign direct investment as well as currency and deposits.
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Inward portfolio investment and loans have been major contributors to the surge in India’s foreign liabilities, IIP report released by the Reserve Bank of India (RBI) said. The fall of the Indian rupee against the US dollar during the quarter led to a change in the figures of India’s liabilities when valued in the US dollar terms.
According to the report, reserve assets accounted for more than two-thirds of India’s global financial assets. The rise in international financial assets of Indian residents was led by $99.2 billion in reserve assets on the back of contribution from major components such as overseas direct investment, currency and deposits.
Inward direct investment and portfolio equity investment together accounted for about 90%, increasing international financial liabilities during 2020-21.
Non-debt liabilities, on the other hand, had a share of 52.4% of India’s external liabilities.
Indian non-residents’ net claims on India went down by $22.7 billion between April 2020 and March 2021. However, the increase in overseas assets of Indian residents ($141.2 billion) through several investments, including direct and portfolio investment, exceeded their foreign-owned assets in India ($118.5 billion).
India’s international financial assets and international financial liabilities have recorded a rise of 70.9% in March 2021 from 65.6% in 2020.
The report shows that Indian residents’ foreign financial assets and claims of non-residents of India to GDP at current market prices hiked during the same period because of the decline in GDP as a result of the Covid-19 pandemic. However, the net IIP of India to GDP improved to (-) 13.1% in March 2021, while it was (-) 13.9% a year ago