The Hindu Business Line : External debt rises to $120.9 b

THE country's external debt rose by $7.3 billion to $120.9 billion at the end of December 2004, against $113.6 billion on September 30. The depreciation of the US dollar against major currencies accounted for a major portion of the increase.

"A large part of the increase, about 57 per cent or $4.1 billion, is explained by the valuation change arising out of depreciation of the US dollar against other major international currencies," the Finance Ministry has said while releasing the external debt figures for the quarter ended December 2004.

The Ministry has pointed out that the share of the dollar in the debt stock of the country has gradually declined from 54.3 per cent at end-March 2002 to 43.6 per cent at end-December 2004. "Measured in US dollars, the impact of valuation change on India's total external debt due to variation of exchange rate of the US dollar against other major international currencies was quite significant during October-December 2004," the Ministry has said.

The country's external debt as at end-December 2004 is a 7.2 per cent increase over the $112.8 billion at the end of December 2003.

While short-term debt increased by 14 per cent to $6.9 billion, long-term debt rose by 6.8 per cent to $114 billion.

Of the total external debt, loans from multilateral lending agencies such as the World Bank and ADB were up 4.3 per cent at $31.66 billion, while bilateral loans from other countries rose marginally by 0.6 per cent to $17.83 billion till December 2004.

External commercial borrowings (ECBs) increased by 20.2 per cent to $25.37 billion till 2004. While long-term NRI deposits rose by 5.5 per cent to $31.8 billion, export credit was up 3.3 per cent to $4.98 billion. Rupee debt dipped by 9.3 per cent to $2.39 billion till December.

The Government has said that it was adopting a cautious debt management policy. "The external debt management policy of the Government continues to be one of caution, focusing on raising loans from least expensive sources preferably with longer maturity profiles, accelerating growth of exports, monitoring of short-term debt, keeping commercial debt under manageable limits and encouraging non-debt creating capital flows," the Finance Ministry said.

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