External Debt At $105 Bn In December 2002

Even as the country's external debt stock rose to $105 billion at the end of December 2002 from $98.8 billion in March 31, 2002, the external debt indicators have progressively witnessed improvement both in debt-gross domestic product (GDP) and debt-service ratios during the ten-year period between 1992 and 2002. The country's external debt is estimated at around $102 billion at present.

With the government prematurely repaying sovereign loans amounting to $3.03 billion during February 2003, the country's external debt stock has decreased, according to a status report on India's external debt released by the finance ministry.

The government proposed to reduce the external debt further during the course of the current fiscal. Sovereign debt, estimated at $45.8 billion was planned to be brought down to around $42 billion by March 2004, finance ministry officials said.

 

An outgo of $6 billion is also the latest estimated for the repayment of the Resurgent Indian Bonds by August, of which $4.23 billion will be accounted for by the principal. Loans worth $2-$3 billion are also proposed to be prepaid. This includes $1.7 billion bilateral and high-cost debt.

Officials said the payments would commence from the second quarter of the current fiscal.

At the end of December 2002, the largest chunk of external debt was accounted for by a multilateral debt of $32.6 billion, compared to $31.9 in March 2002.

Commercial debt at $22.41 billion at the end of December 2002, compared to $23.25 billion in March 2002, accounted for 21.4 per cent share in India's external debt. Commercial debt, however, decreased 3.6 per cent between March and December 2002. Deposits by non-resident Indians grew 29.5 per cent to $22.21 billion at the end of 2002, compared to $17.15 billion in March 2002.

"Against the backdrop of buoyancy in foreign exchange reserves and prevailing low level of interest rates both in the domestic and international markets, the policy stance entailed encouraging the corporate and public sector undertakings to prematurely retire the high cost loans and as a result of $1.14 billion of such high cost loans were prepaid during 2002-03," the report said.

The debt-GDP ratio declined from 38.7 per cent as on end-March, 1992 to 20.6 per cent at end-December 2002, the debt service as a per cent of current receipts declined from 30.2 per cent to 13.7 per cent during the period.

Other indicators like short-term to total debt ratio, short-term debt to forex assets ratio have also improved substantially, the report said.

The short-term debt component in December 2002 stood at $3.36 billion, as against the long term debt of $101.63 billion during the period.

Increase in debt stock from end of March 2002 to end of December 2002 is attributed to an increase in NRI deposits, short term debt and bilateral debt.