White Views On The Red

($1.69 billion) has been a real decline, netted out for exchange rate changes. The share of short-term debt in the debt stock is 5.46 per cent and this has increased marginally because of short-term non-resident deposits.

The share of concessional debt, at 45.49 per cent, is also fairly high when compared to other countries. The point is then made that the apparent debt stock does not reflect the degree of concessionality.

Relying on the World Banks world debt tables and making cross-country comparisons, the white paper argues that Indias debt stock is not alarming. For example, in 1995-96 the debt to gross domestic product (GDP) ratio dropped to 28.71 per cent, below the 30 per cent cut-off used for moderately indebted countries. The debt-to-current receipts ratio was 191.44 per cent in the same year, slightly above the 165 per cent cut-off used for moderately indebted countries. But in many ways what is more important than the stock of debt are the debt servicing flows. The World Bank figures, quoted by the white paper, show that the debt service-to-current receipts ratio was 25.70 per cent in 1995-96, well above the 18 per cent cut-off used for moderately indebted countries. And the interest payments to current receipts ratio was 8.96 per cent in the same year, below the 12 per cent cut-off used for moderately indebted countries. Managing external debt is thus not a serious problem for the fourth most indebted nation iworld.

The white papers own figures give a debt service ratio of 25.7 per cent in 1995-96. While the white paper does not stick its neck out, the Survey projects a debt service ratio of 25 per cent in 1996-97. Life will be a lot more comfortable if this ratio can be brought down to 20 per cent. This can be done by increasingly switching to non-debt creating capital inflows, like foreign direct investments.