India's external debt declines 2.8% in June 2018 quarter

External debt stood at US$ 514.4 billion end June 2018

At end-June 2018, India's external debt witnessed a decline of 2.8% over its level at end-March 2018, on account of a decrease in commercial borrowings, short-term debt and non-resident Indian (NRI) deposits. The decrease in the magnitude of external debt was primarily due to valuation gains resulting from the appreciation of the US dollar against the Indian rupee and major currencies.

The external debt to GDP ratio stood at 20.4% at end-June 2018, a shade lower than its level of 20.5% at end-March 2018.

At end-June 2018, India's external debt was placed at US$ 514.4 billion, recording a decrease of US$ 14.9 billion over its level at end-March 2018. Valuation gains due to the appreciation of the US dollar against the Indian rupee and major currencies (Japanese yen, euro, SDR, and pound sterling etc) were placed at US$ 13.0 billion. Excluding the valuation effect, the decrease in external debt would have been US$ 1.9 billion instead of US$ 14.9 billion at end-June 2018 over end-March 2018.

Commercial borrowings continued to be the largest component of external debt with a share of 37.8%, followed by NRI deposits (24.2%) and short-term trade credit (18.8%).

At end-June 2018, long-term debt (with original maturity of above one year) was placed at US$ 415.7 billion, recording a decline of US$ 11.4 billion over its level at end-March 2018.

The share of long-term debt (original maturity) in total external debt at end-June 2018 was 80.8%, higher than its level of 80.7% at end-March 2018.

The share of short-term debt (with original maturity of up to one year) in total external debt decreased to 19.2% at end-June 2018 from 19.3% at end-March 2018. The ratio of short-term debt (original maturity) to foreign exchange reserves increased to 24.3% at end-June 2018 (24.1% at end-March 2018).

Short-term debt on a residual maturity basis (i.e., debt obligations that include long-term debt by original maturity falling due over the next twelve months and short-term debt by original maturity) constituted 42.9% of total external debt at end-June 2018 (42.0% at end-March 2018) and stood at 54.3% of foreign exchange reserves (52.3% at end-March 2018).

US dollar denominated debt continued to be the largest component of India's external debt with a share of 50.1% at end-June 2018, followed by the Indian rupee (35.4%), SDR (5.4%), Japanese yen (4.7%) and euro (3.3%).

The borrower-wise classification shows that the outstanding debt of both government and non-government sectors decreased at end-June 2018.

Debt service payments declined to 6.0% of current receipts at end-June 2018 as compared with 7.5% at end-March 2018 - reflecting lower repayments of external commercial borrowings.

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