India cuts US debt holding to $38.9 bn in July

For the first time in ten months, India has reduced its investment in American debt securities. India’s holding of US treasury securities marginally declined to $38.9 billion in July as compared to $39.3 billion in June.

Going by the data with the US Treasury Department, India has reduced its investment in such securities for the first time since October 2008, when the figure was $18.3 billion.

In September last year, when the collapse of Lehman Brothers pushed the global financial system into a turmoil, India’s investment in US treasury securities had touched $20.3 billion.

China continues to remain the largest foreign holder of these securities with its investments reaching a whopping $800.5 billion in July, an increase from the June figure of $776.4 billion.

Except China, other BRIC (Brazil, Russia, India and China) nations brought down their holding of US treasury securities in July. Brazil cut its investment to $138.1 billion as compared to $139.8 billion in June while Russia brought down the same to $118 billion from $119.9 billion in the previous month.

After China, the largest foreign holder of US debt is Japan. The Asian economic giant invested $724.5 billion in these securities in July. During the financial year ended September 30, America’s budget deficit touched $1.4 trillion, accounting for 9.9 per cent of the national GDP.

The recession-hit country has been grappling with one of the worst financial turmoils in decades, forcing the federal government to come up with unprecedented measures to revive the economy.