The Hindu Business Line : External debt up 22.6% in fiscal 06-07

New Delhi, Sept. 18 India’s external debt stock went up by $28.5 billion during 2006-07 to touch $155 billion as on March 31, 2007, representing a 22.6 per cent increase over the year ago period and accounting for 16.4 per cent of the gross domestic product (GDP).

Almost 10 per cent of the addition in total external debt during the year could be attributed to a valuation change as a result of the weakening US dollar vis-À-vis other major international currencies, according to status report on external debt released by the Finance Ministry here today.

In rupee terms, the country’s external debt at end-March 2007 stood at Rs 6,75,857 crore. Component wise, as much as 56 per cent of the increase was accounted for by commercial borrowings by Indian companies, followed by non-resident Indian (NRI) deposits (16 per cent), short-term debt (12 per cent) and multilateral debt (11 per cent). Indian companies took to overseas sources of commercial borrowing for lower interest rates and also to fund their foreign acquisitions.

Sovereign debt at $48.6 billion at end-March 2007 accounted for around 31.4 per cent of total external debt stock and 5.3 per cent in relation to GDP.

Debt service ratio declined from 9.9 per cent during 2005-06 to 4.8 per cent during 2006-07, showing a perceptible improvement. The foreign exchange reserves accounted for a cover of as much as 129 per cent to total external debt stock. However, other indicators, such as debt to GDP ratio rose, though marginally to 16.4 per cent, short-term debt to GDP ratio to 1.3 per cent, short-term debt to total debt to 7.7 per cent and short-term debt to foreign exchange assets to 6.2 per cent.

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