India’s external debt US $496 billion

India’s external debt registered at about US $496 billion at end-September 2017

India’s external debt stock stood at US$ 495.7 billion, recording an increase of US$ 23.9 billion (5.1 %) at end-September 2017, over the level at end-March 2017 . The rise in external debt during the period was primarily due to the increase in foreign portfolio investment (FPI) in the debt segment of domestic capital market included under commercial borrowings. Some increase in short-term debt primarily due to trade related credit also contributed to the overall increase in total external debt. On a sequential basis, total external debt at end-September 2017 increased by US$ 10.0 billion (2.1 %) from the end-June 2017 level.

Major highlights pertaining to India’s external debt as at end-September 2017 are presented below:

Ø The maturity pattern of India’s external debt indicates dominance of long-term borrowings. At end-September 2017, long-term external debt accounted for 81.3 % of India’s total external debt, while the remaining (18.7 %) was short-term external debt.

Ø Long-term debt at end-September 2017 was at US$ 403.0 billion, showing an increase of US$ 19.1 billion (5.0 %) over the level at end-March 2017. Short-term external debt registered an increase of 5.4 % and stood at US$ 92.7 billion at end-September 2017, though its share in total debt at 18.7 % was only marginally higher than the 18.6 % at end-March 2017.

Ø Valuation loss (depreciation of US dollar against the SDR, Euro and pound sterling) was at US$ 1.4 billion in September 2017 compared to March 2017. This implies that excluding the valuation effect, increase in debt would have been lower at US$ 22.5 billion instead of US$ 23.9 billion at end-September 2017 over the end-March 2017 level.

Ø The shares of Government (Sovereign) and non-Government debt in the total external debt were 21.6 % and 78.4 % respectively, at end-September 2017 with the former’s share increasing from 19.4 % at end-March 2017. This was mainly due to the increasing level of foreign portfolio investment in government securities.

Ø US dollar denominated debt accounted for 50.0 % of India’s total external debt at end-September 2017, followed by Indian rupee (35.7 %), SDR (5.7 %), Japanese Yen (4.4 %), Euro (3.2 %), Pound Sterling (0.6 %), and others (0.4 %).

Ø The foreign exchange cover to total external debt improved to 80.7 % at end-September 2017 compared to 78.4 % at end-March 2017.

Ø The ratio of short-term external debt by original maturity to foreign exchange reserves stood at 23.2 % at end-September 2017 as compared to 23.0 % at end June 2017 and 23.8 % at end-March 2017.

Ø On a residual maturity basis, short-term debt constituted 41.7 % of total external debt at end-September 2017 (41.1 % at end-June 2017 and 41.5 % at end-March 2017) and its ratio to total foreign exchange reserves was at 51.7 % (51.6 % at end-June 2017 and 52.9 % at end-March 2017).

Ø The ratio of concessional debt to total external debt was 9.1 % at end-September 2017, compared to the 9.3 % at end-March 2017.

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