ECBs, NRI deposits push external debt

The country's total external debt rose 6.6% to $475.8 billion during 2014-15 from $446.3 billion in 2013-14

India's total external debt rose by 6.6 per cent to $475.8 billion during 2014-15 from $446.3 billion in 2013-14, mainly due to increase in external commercial borrowings (ECBs) and non-resident Indian (NRI) deposits.

However, as a percentage of the gross domestic product (GDP), the country's external debt works out to be 23.8 per cent at the end of March 2015, marginally up from 23.6 per cent as of March 2014.

Long-term debt at the end of March was $391.1 billion, reflecting an increase of 10.3 per cent over the March 2014 level.

Short-term external debt was $84.7 billion in March, showing a decline of 7.6 per cent over the March 2014 level.

Short-term debt, the release said, accounted for 17.8 per cent of the total external debt as at March-end as against 20.5 per cent at March 2014, RBI said in a release.

"Further, the increase in the magnitude of external debt was partly offset by the valuation gains resulting from the appreciation of the US dollar vis-a-vis Indian rupee and other major currencies," it said.

Aditi Nayar, senior economist, ICRA, said the accretion of external debt moderated in 2014-15 as compared with 2013-14 and was outpaced by the increase in foreign exchange reserves, resulting in a welcome improvement in the coverage provided by reserves.

Other indicators of vulnerability too receded, such as the proportion of short-term debt by original and residual maturity.

If external developments lead to a prolonged bout of risk aversion, refinancing pressures might re-emerge for a portion of the debt that is set to mature during 2015-16. However, the substantial level of foreign exchange reserves limits the vulnerability on a macroeconomic level, Nayar said.

The shares of government (sovereign) and non-government debt in the total external debt increased to 18.9 per cent and 81.1 per cent, respectively, at the end of March 2015.

The share of dollar-denominated debt was the highest in the external debt stock at 58.3 per cent at the end of March 2015, followed by debt denominated in Indian rupee (27.9 per cent), SDR (5.8 per cent), Japanese yen (4 per cent) and Euro (2.4 per cent), it said.