External debt rises by 17.2% to $305.9 bn

India's external debt rose by 17.2% to $305.9 billion in 2010-11 primarily on account of high overseas corporate borrowings, short-term debt and multilateral borrowings.

At the end of March 2010, the country's external debt was at $261 billion.

Corporate overseas borrowings rose as much as 28.9% and short-term borrowings increased by 21.2%, the Reserve Bank of India (RBI) said in a statement.

It was followed by NRI deposits which rose by 16.9% at $51.6 billion while multilateral debt increased by 15.8% at $48.4 billion.

The rise in NRI deposits was largely on account of increase in NRO deposits and FCNR(B) deposits and partly due to valuation effects, it said.

However, the debt service ratio declined to 4.2% during 2010-11 as compared to 5.5% a year ago.

Of the total debt, the long-term debt stood at $240.9 billion while short-term debt at $65 billion.

The RBI also said that the valuation effect reflecting the depreciation of the US dollar against other major global currencies and Indian rupee resulted in an increase in India's external debt by $6.5 billion during 2010-11.

This implies that excluding the valuation effects, the stock of external debt as at end-March 2011 would have increased by $38.4 billion over the level at end-March 2010, it said.