India's Overseas Financial Surge: A Benchmark Year

India's overseas financial assets grew significantly in 2024-25, driven mainly by direct investments, currency and deposits, and reserve assets. The Reserve Bank of India reports a USD 105.4 billion rise, with net claims on India declining by USD 31.2 billion, signaling a stronger external financial position.

India has made remarkable strides in strengthening its overseas financial assets in the 2024-25 fiscal year, propelled chiefly by robust overseas direct investments, currency and deposits, and reserve assets. This is according to fresh data from the Reserve Bank of India (RBI), which underscores that more than 72 per cent of the growth in India's foreign financial assets can be attributed to these sectors, with reserve assets alone responsible for over 54 per cent of the augmentation.

Contributions from currency and deposits and direct investments have significantly boosted the growth in overseas assets owned by Indian residents. The RBI noted, "Over 72 per cent of the rise in India's overseas financial assets was due to an increase in overseas direct investment, currency and deposits."

In the fiscal year 2024-25, India's total external financial assets swelled by USD 105.4 billion, while its external financial liabilities increased by USD 74.2 billion. Consequently, the net claims of non-residents on India saw a decrease of USD 31.2 billion during this period. The RBI's report highlights that this reduction in net claims stemmed primarily from Indian residents' overseas financial assets growing by USD 60.0 billion, outpacing the USD 25.8 billion increase in foreign-owned assets in India during the January-March 2025 quarter.

The financial health of India on the international stage has improved, as indicated by the ratio of international financial assets to liabilities rising to 77.5 per cent in March 2025, up from 74.1 per cent the previous year. This advancement underscores a more robust external financial stance for the country. On the liabilities front, inward direct investments, loans, and currency and deposits were key players, with inward direct investment and loans accounting for over three-fourths of the increase in foreign liabilities of Indian residents during the January-March 2025 timeframe.

Observations indicate loans increased by USD 10.0 billion, while inward direct investments grew by USD 9.7 billion during the quarter. Overall, the data reveal a notable enhancement in India's international investment position, buoyed by significant asset creation abroad and a moderate rise in liabilities. (ANI)

(With inputs from agencies.)