India’s External Debt Rises 8.2% YoY
In terms of various debt vulnerability indicators, India’s sustainability was better than the Low-and-Middle Income Countries (LMICs) as a group and vis-à-vis many of them individually, the ministry said
India’s external debt is at USD 620.7 billion as of end-March 2022 and grew by 8.2 per cent over USD 573.7 billion as of end-March 2021, according to the data released by the Ministry of Finance on Monday.
While 53.2 per cent of it was denominated in US dollars, Indian rupee-denominated debt, estimated at 31.2 per cent, was the second largest, the ministry added.
External debt as a ratio to gross domestic product (GDP) fell marginally to 19.9 per cent as of end-March 2022 from 21.2 per cent a year ago.
“Foreign currency reserves as a ratio to external debt stood slightly lower at 97.8 per cent as at end-March 2022 than 100.6 per cent a year ago,” the ministry added in the statement.
The long-term debt, estimated at USD 499.1 billion, constituted the largest chunk of 80.4 per cent, while the short-term debt, at USD 121.7 billion, accounted for 19.6 per cent of the total.
The ministry also said that commercial borrowings (CBs), NRIs deposits, short-term trade credit and multilateral loans together accounted for 90 per cent of the total external debt.
“While NRI deposits marginally contracted during end-March 2021 and end-March 2022, CBs, short-term trade credit and multilateral loans, on the other hand, expanded during the same period. The rise in CBs, short-term trade credit and multilateral loans together was significantly larger than the contraction in NRI deposits,” it said.
As of end-March 2022, sovereign external debt (SED) amounted to USD 130.7 billion, increasing by 17.1 per cent over the level a year ago, reflecting the additional allocation of SDRs by the International Monetary Fund (IMF) during 2021-22.
The SDRs rose to USD 22.9 billion from USD 5.5 billion as of end-March 2021. FPI holding of G-Sec, on the other hand, slid to USD 19.5 billion from USD 20.4 billion a year ago.
Talking about the non-sovereign external debt, it is estimated at USD 490.0 billion as of end-March 2022, posting a growth of 6.1 per cent over the level a year ago. CBs, NRI deposits, and short-term trade credit accounted for about 95 per cent of non-sovereign debt.
“The short-term trade credit rose substantially by 20.7 per cent to USD 117.4 billion as at end-March 2022 on the back of a surge in imports during 2021-22,” according to the ministry.
The debt service ratio fell to 5.2 per cent during 2021-22 from 8.2 per cent during 2020-21 due to buoyancy in current receipts and a decline in debt service payments.
“The debt service payment obligations arising out of the stock of external debt as at end-March 2022 are projected to trend downwards over the coming years,” it said.