India’s External Debt : Update

India’s External Debt : Update

India’s external debt was placed at $663.8 billion, an increase of US$ 39.7 billion over its level at end-March 2023, informed the Reserve Bank of India recently.

• At end-March 2024, India’s external debt was US$ 663.8 billion, an increase of US$ 39.7 billion over its level at end-March 2023.
• The external debt-to-GDP ratio declined to 18.7 percent end-March 2024 from 19.0 percent at end-March 2023.
• The Valuation effect due to the appreciation of the US dollar vis-à-vis the Indian rupee and other major currencies such as the yen, euro and SDR amounted to US$ 8.7 billion.
• Valuation effects are the change in value of assets held abroad with regard to the value of domestic assets held by foreign investors.
• Excluding the valuation effect, external debt would have increased by US$ 48.4 billion instead of US$ 39.7 billion at end-March 2024 over end-March 2023.
• At end-March 2024, long-term debt (with an original maturity of above one year) was placed at US$ 541.2 billion, recording an increase of US$ 45.6 billion over its level at end-March 2023.
• The share of short-term debt (with an original maturity of up to one year) in total external debt declined to 18.5 percent at end-March 2024 from 20.6 per cent at end-March 2023.
• Similarly, the ratio of short-term debt (original maturity) to foreign exchange reserves declined to 19.0 percent at end-March 2024 (22.2 per cent at end-March 2023).
• US dollar-denominated debt remained the largest component of India’s external debt, with a share of 53.8 percent at end-March 2024, followed by debt denominated in the Indian rupee (31.5 percent), yen (5.8 percent), SDR (5.4 percent) and euro (2.8 percent).
• Outstanding debt of both government and non-government sectors increased at end-March 2024 over the level a year ago.
• The share of outstanding debt of non-financial corporations in total external debt was the highest at 37.4 percent, followed by deposit-taking corporations (except the central bank) (28.1 percent), general government (22.4 percent) and other financial corporations (7.3 percent).
• Loans remained the largest component of external debt, with a share of 4 percent, followed by currency and deposits (23.3 percent), trade credit and advances (17.9 percent) and debt securities (17.3 percent).
• Debt service  increased to 6.7 percent of current receipts at end-March 2024 from 5.3 percent at end-March 2023, reflecting higher debt service.