India's external debt $480 bn at Dec-end, up 4.7% y-o-y

Dollar denominated debt accounted for 57.6% of India's total external debt, followed by that in the rupee at 28.7%

India’s total external debt rose one per cent or $4.9 billion to $480.2 billion end-December, from end-March last year, the finance ministry said in its external debt report. Government (sovereign) external debt stood at $90.7 billion end-December. Non-government debt was $389.5 billion. The report said external debt had remained within manageable limits.

Policy “continues to focus” on monitoring long-term and short-term debt, raising sovereign loans on concessional terms with longer maturities, regulating external commercial borrowing and rationalising of interest rates on non-resident Indian deposits, it said.

However, year-on-year, the debt grew 4.7 per cent. Long-term external debt increased 2.2 per cent or $8.8 billion; short-term debt fell 4.6 per cent or $3.9 billion.

The report said the dollar rose against the rupee and most other major currencies between March and December 2015. "Excluding (this) valuation effect, the external debt would have been higher at $488.1 bn at end-December 2015." The valuation effect arises because external debt is denominated in different currencies, and the dollar, international standard currency for debt, fluctuates over time vis-a-vis other currencies.

The share of long-term debt in total external debt increased from 82 per cent at end-March to 83 per cent at end-December 2015. It was $398.6 billion at end-December, up $8.8 billion over end-March. The rise was primarily due to higher commercial borrowing and NRI deposits.

At end-December, commercial borrowing stood at $183.6 billion, a rise of 1.5 per cent. NRI deposits at $122.6 billion rose 6.5 per cent over end-March. Commercial borrowings and NRI deposits together accounted for 63.8 per cent of total external debt (long-term and short-term) at end-December.

During end-March 2010 to end-March 2015, the ratio of government debt to gross domestic product was in the range of 4.4 to 4.7 per cent. The increase in 'Other Government External Debt-Long- term' in recent years reflects the level of foreign institutional investment in government securities.

Dollar denominated debt accounted for 57.6 per cent of India's total external debt, followed by that in the rupee (28.7 per cent), Sprecial Drawing Rights (5.8 per cent), the yen (4.1 per cent) and euro (2.3 per cent).

India's key debt indicators compare well with other developing countries. The ratio of India's external debt stock to gross national income, at 22.7 per cent, was the third lowest.