The Hindu Business Line : External debt surges by $6.19 b in Q3

New Delhi March 30 The country's external debt stock shot up by $6.19 billion in the quarter ended December 2006 to $142.66 billion on the back of a sharp increase in commercial borrowings by corporates and also due to rise in non-resident India (NRI) deposits.

The previous quarter saw an increase of $4.27 billion in external debt to touch $136.47 billion at end-September 2006.

In the first quarter, the external debt stock had increased by $5.81 billion to $132.20 billion as on end-June 2006.

Emerging Markets

While long-term debt outstanding for the quarter ended December 2006 increased by $6.80 billion to $132.64 billion, short-term debt declined by $610 million to $10.02 billion at end-December 2006.

At end-December 2006, the foreign exchange reserves stood at $177.3 billion. This was the fifth largest stock of reserves among the emerging markets and sixth largest in the world.

With the Indian corporate sector acquiring assets overseas in a big way and spreading its footprints abroad, the commercial borrowings have also been on the rise.

NRI-Deposits

Under long-term debt, the largest increase over the quarter was recorded by commercial borrowings. This component grew 11 per cent from debt outstanding of $32.42 billion as on end-September 2006 to $35.98 billion as on end-December 2006. NRI-deposits (long term) increased by $1.87 billion for the period under review to $38.38 billion at end-December 2006 from $36.52 billion at end-September 2006.

Although the proportion of short-term debt to total debt declined to 7 per cent as at end-December 2006 compared with 7.8 per cent at end-September, this was much higher than the 4.3 per cent recorded at the post reform period of 1995.

Export Credit

For the quarter ended December 2006, multilateral debt increased by $975 million to $34.57 billion and bilateral debt showed an increase of $36 million to $15.77 billion. Export credit outstanding rose by $299 million to $5.957 billion at end-December 2006. Rupee debt remained broadly at the same level as at the end of previous quarter.

Non-resident deposits continued to account for the largest share of 26.9 per cent in the total debt outstanding at end-December 2006, followed by commercial borrowings at 25.2 per cent and multilateral debt at 24.2 per cent. The share of bilateral debt was 11.1 per cent. Export credit and rupee debt accounted for 4.2 per cent and 1.4 per cent respectively.