Exchange fluctuation inflates external debt: RBI

Exchange rate fluctuation has inflated India's external debt by $18.7 billion (about Rs 90,000 crore) during the three-month period ending December 31, 2009, according to a data from the Reserve Bank of India (RBI).

However, if the US dollar had weakened against other currencies including rupee, India's external debt would have declined by $10 billion during September-December 2009, said the RBI's report on India's external debt.

After taking into account the valuation effect of $18.7 billion dollars--the changes in the value of assets India holds abroad, minus the changes in the value of domestic assets held by foreign investors--the country's external debt during the the three-month period rose by $8.7 billion to $251.4 billion as on December 31, 2009.

In rupee terms, India's external debt worked out to be about Rs 12 lakh crore.

The RBI report said that at the end of December, the external debt basket comprised 52 per cent of dollar denominated debt, followed by rupee debt at 17.2 per cent, yen debt at 12.7 per cent, Special Drawing Rights (SDRs) issued by IMF at 11.4 per cent and European Union at 4.2 per cent among others.

The rupee component of the external debt include NRI deposits, Foreign Institutional Investor's (FII) investment in government and non-government securities and debt owed to Russia.

Out of the total external debt, the government's debt accounted for 26 per cent at $66.9 billion, while the remaining portion was on account of borrowings by corporates.

The non-government debt, it said, has increased to $184.46 billion at the end of December, accounting for 73.4 per cent of the total.

The ratio of the government's external debt to gross domestic product (GDP) had remained around 5 per cent in the last three years, the RBI said.