India’s external debt increased 2.6 per cent year-on-year at the end of fiscal year 2018-19, primarily on account of an increase in short-term debt, commercial borrowings and non-resident Indian (NRI) deposits.
US dollar-denominated debt remained the largest component of the debt, with a share of 50.5 per cent at the end of March 2019, followed by the rupee (35.7 per cent), Japanese yen (5.0 per cent), special drawing right (4.9 per cent) and euro (3.0 per cent).
However, the increase in the external debt was “partially offset by valuation gain, resulting from the appreciation of the US dollar against the rupee and other major currencies,” the Reserve Bank of India (RBI) said on Friday.
At the end of March 2019, India’s external debt was $543 billion, recording an increase of $13.7 billion year-on-year.
Valuation gain because of the appreciation of the dollar vis-a-vis rupee and other major currencies was at $16.7 billion.
“Excluding the valuation effect, the increase in external debt would have been $30.4 billion instead of $13.7 billion at end-March 2019 over end-March 2018,” the central bank said.
The external debt to gross domestic product (GDP) ratio stood at 19.7 per cent at the end of March 2019, lower than its level of 20.1 per cent at the end of March 2018.
Commercial borrowings remained the largest component of external debt, with a share of 38.0 per cent, followed by deposits from NRIs (24 per cent) and short-term trade credit (18.9 per cent).
At the end of March 2019, long-term debt, which is defined as having maturity of above one year, was at $434.6 billion, higher by $7.5 billion over the March 2018 level.
The share of long-term debt in total external debt at the end of March 2019 was 80 per cent, lower than its 80.7 per cent at end-March 2018.
Consequently, short-term debt, which matures in less than a year, constituted 20 per cent of the total external debt, up from 19.3 per cent a year ago.
The ratio of short-term debt to foreign exchange reserves increased to 26.3 per cent at the end of March 2019, compared with 24.1 per cent at the end of March 2018, according to the RBI.