PHD Research Bureau
India’s External Debt at about US$ 450 billion
With a modest level of current account deficit (CAD) and sharp rise in non-debt creating flows in Q1 of 2014-15, India’s external debt stands at US$ 450 billion at the end of June 2014, which has increased marginally by 1.8% over end-March 2014. Of the total absolute increase of US$ 7.9 billion in total external debt, a marginal increase of about US$ 0.4 billion during the quarter was on account of valuation change, reflecting a marginal depreciation of the US dollar against the Indian rupee and other major currencies. The increase in total external debt was primarily on account of rise in commercial borrowings by US$ 6.3 billion over end-March 2014. Outstanding NRI deposits with a rise of US$ 2.4 billion over end-March 2014 were the second largest source of increase in India ’s external debt
In terms of major components, the share of commercial borrowings continued to be the highest at 34.2% of total external debt, followed by NRI deposits (23.6%) and short-term debt based on original maturity (19.5%). The share of short-term debt in total debt witnessed a decline over the preceding quarter as well as the corresponding quarter of the previous year. Short-term debt at US$ 87.9 billion accounted for 19.5% of the total external debt as at end-June 2014 as compared to 20.2% at end-March 2014
External Debt – Outstanding and Variation
Source: RBI, P: Provisional. PR: Partially Revised
With decline in short-term debt, the ratio of short-term debt (original maturity) to foreign exchange reserves declined to 27.8% as at end-June 2014 from 29.3% as at end-March 2014. Similarly, on residual maturity basis, the ratio of short-term debt to foreign exchange reserves worked out to 55.3% at end-June 2014 as compared with 57.4% at end-March 2014. The US dollar denominated debt continued to be the largest component of India ’s external debt with a share of 61.1% as at end-June 2014, followed by Indian rupee (22.1%), SDR (6.8%), Japanese Yen (4.9%) and Euro (3.1%). Government (Sovereign) external debt stood at US$ 85.4 billion as at end-June 2014 as against US$ 81.5 billion as at end-March 2014. The shares of
Government and non-Government external debt in the total external debt were 19% and 81%, respectively, as at end-June 2014.