India’s external debt increased by 6.6 per cent to $475.8 billion in 2014-15, compared to $446.3 billion at the end of the previous year, according to a report by the Department of Economic Affairs.
The Department’s annual ‘India’s External Debt: A status report’ for 2014-15 shows that the country’s external debt has grown faster than its GDP, with the external debt-GDP ratio rising to 23.8 per cent at end-March 2015 from 23.6 per cent at end-March 2014.
Most of this external debt is in the form of long-term debt. “At end-March 2015, long-term external debt was $391.1 billion, showing an increase of 10.3 per cent over the level at end-March 2014. As a proportion of total external debt, long-term external debt accounted for 82.2 per cent at end-March 2015 vis-à-vis 79.5 per cent at end-March 2014,” the report said.
“The increase in long-term external debt during the year was primarily on account of rise in commercial borrowings and NRI deposits. The growth in commercial borrowings can be attributed to the rise in commercial bank loans and securitised borrowings,” the report added.
Short-term external debt was at $84.7 billion at end-March 2015, down 7.6 per cent from $91.7 billion at the end of March 2014. This, the report says is mainly due to the decline in FII investment in Government treasury bills. “Thus, the share of short-term external debt in total external debt declined from 20.5 per cent at end-March 2014 to 17.8 per cent at end-March 2015,” the report said. Sovereign external debt was at $89.7 billion at the end of March 2015, compared to $83.7 billion at end-March 2014.
While saying that the country’s external debt position is still well within manageable limits, the report added that India compares well internationally on this front. “According to the World Bank’s ‘International Debt Statistics 2015’ which presents the debt data for 2013…The ratio of India’s external debt stock to gross national income at 23.0 per cent was the sixth lowest with China having the lowest ratio at 9.5 per cent. In terms of the cover provided by foreign exchange reserves to external debt, India’s position was sixth highest at 64.7 per cent,” the report said.
