Did Net Claims of Non-Residents on India Drop by $34.2 Billion in Q4 FY25?
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Synopsis
In a significant financial shift, net claims of non-residents on India fell by $34.2 billion in Q4 FY25, revealing critical insights into India's international financial landscape. Discover how increased overseas assets played a pivotal role in this decline and what it means for India's economy going forward.
Key Takeaways
- Net claims of non-residents on India declined by $34.2 billion.
- Indian residents' overseas financial assets rose by $60.0 billion.
- Inward direct investments and loans significantly increased.
- India’s international assets-to-liabilities ratio improved to 77.5%.
- Debt liabilities accounted for 54.8% of total external liabilities.
New Delhi, June 27 (NationPress) The net claims of non-residents on India experienced a decline of $34.2 billion during the January-March quarter of FY25, bringing the total to $330 billion, according to data released by the RBI on Friday.
The drop in net claims was primarily driven by a significant increase in Indian residents' overseas financial assets, which rose by $60.0 billion, compared to a more modest increase of $25.8 billion in assets owned by foreigners in India. This information is part of the data concerning India's International Investment Position as of the end of March 2025.
“The surge in reserve assets contributed to over 54 percent of the increase in Indian residents' overseas financial assets, followed closely by gains in currency and deposits, as well as direct investments,” the IIP data indicated.
Moreover, the rise in loans, amounting to $10.0 billion, coupled with inward direct investment of $9.7 billion, accounted for more than three-fourths of the increase in foreign liabilities for Indian residents during the January-March 2025 period.
In total, reserve assets represented 58.7 percent of India's international financial assets. The ratio of India's international assets to its international liabilities improved to 77.5 percent in March 2025, rising from 74.8 percent in the previous quarter.
The Central Bank noted that the proportion of debt liabilities within total external liabilities increased during the quarter, reaching 54.8 percent.
Throughout the 2024-25 fiscal year, net claims of non-residents decreased by $31.2 billion due to a more substantial rise in India's external financial assets, which increased by $105.4 billion, compared to external financial liabilities, which rose by $74.2 billion.
More than 72 percent of the increase in India's overseas financial assets was attributed to growth in overseas direct investment, currency and deposits, and reserve assets. Inward direct investments, loans, and currency & deposits together accounted for over three-fourths of the increase in foreign liabilities during the fiscal year.
The ratio of India’s international financial assets to international financial liabilities rose to 77.5 percent in March 2025, up from 74.1 percent a year earlier, as the data revealed.
Point of View
It is essential to recognize that the decline in net claims of non-residents reflects a broader trend in India's economic fortitude. This shift underscores India's growing financial independence, driven by robust overseas investments by its residents. The data signals a positive outlook for India's economic resilience and future investment potential.
NationPress
27/06/2025
Frequently Asked Questions
What are net claims of non-residents?
Net claims of non-residents refer to the total financial claims held by non-resident entities on a country's assets, minus the claims by residents on foreign assets. It reflects the balance of international investments.
How did Indian residents' overseas financial assets change?
During the January-March quarter of FY25, Indian residents' overseas financial assets increased by $60.0 billion, indicating a significant growth in international investments by Indian nationals.
What factors contributed to the decline in net claims?
The decline in net claims was largely due to the higher growth in Indian residents’ overseas financial assets compared to foreign-owned assets in India, with a notable increase in reserve assets.
What does the increase in the ratio of international assets to liabilities signify?
An increased ratio of international assets to liabilities indicates a strengthening financial position for the country, suggesting greater financial stability and capacity to manage external debts.
How does this impact India's economy?
The decline in net claims and the rise in overseas financial assets reflect India's growing economic independence and resilience, which could attract more foreign investments in the future.
