India’s External Debt at $629.1 Billion End-June: RBI


India’s external debt reached $629.1 billion by the end of June 2023, marking a $4.7 billion increase from the end of March 2023, according to the latest data released by RBI. Despite the increase, the external debt to GDP ratio declined slightly, reflecting positive economic trends.


The data, presented in compliance with IMF format and the old format, revealed several key findings:


The external debt to GDP ratio decreased to 18.6% by the end of June 2023, down from 18.8% at the end of March 2023.


A significant portion of the increase in external debt, $3.1 billion, was attributed to the valuation effect caused by the US dollar’s appreciation against major currencies. Excluding this effect, the actual increase in external debt would have been $7.8 billion.


Long-term debt, with an original maturity exceeding one year, rose to $505.5 billion at the end of June 2023, indicating an increase of $9.6 billion compared to March 2023.


Short-term debt, with an original maturity of one year or less, saw a decline, constituting 19.6% of total external debt at the end of June 2023, down from 20.6% in March 2023. The ratio of short-term debt to foreign exchange reserves also decreased to 20.8% from 22.2%.


Short-term debt on a residual maturity basis, which includes long-term debt with maturities within the next twelve months, accounted for 42.8% of total external debt, down from 44.0% in March 2023. It represented 45.3% of foreign exchange reserves, compared to 47.4% at the end of March 2023.


US dollar-denominated debt remained the largest component of India’s external debt, comprising 54.4% of the total. Debt denominated in Indian rupees accounted for 30.4%, followed by SDR (5.9%), yen (5.7%), and the euro (3.0%).


The report also noted changes in outstanding debt, with the general government’s debt decreasing while non-government debt increased.


Non-financial corporations held the largest share of outstanding debt in total external debt at 39.8%, followed by deposit-taking corporations (except the central bank) at 26.6%, general government at 21.1%, and other financial corporations at 7.6%.


The composition of external debt revealed loans as the largest component at 32.9%, followed by currency and deposits at 22.9%, trade credit and advances at 19.0%, and debt securities at 16.8%.


Debt service, which includes principal repayments and interest payments, increased to 6.8% of current receipts by the end of June 2023, up from 5.3% at the end of March 2023.

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