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India’s external debt declined $3.9 billion to $554.5 billion at June-end 2020 vis-a-vis the March-end 2020 level of $558.4 billion, according to the Reserve Bank of India (RBI).
However, the external debt-GDP ratio increased to 21.8 per cent in June-end 2020 from 20.6 per cent recorded atMarch-end 2020 due to contraction in GDP.
External debt comprises multilateral debt, bilateral debt, IMF-SDR (International Monetary Fund – Special Drawing Rights), trade credit, commercial borrowings, non-resident Indian deposits, rupee debt, and short-term debt.
Valuation loss due to the depreciation of the US dollar vis-à-vis major currencies such as euro, yen and SDR were placed at $0.7 billion. Excluding the valuation effect, the decrease in external debt would have been $4.5 billion, instead of $3.9 billion, at June-end, the RBI said in a statement.
Commercial borrowings remained the largest component of external debt, with a share of 38.1 per cent, followed by non-resident deposits (23.9 per cent) and short-term trade credit (18.2 per cent).
Long-term debt (with original maturity of above one year) was placed at $449.5 billion at June-end 2020, recording a decrease of $2 billion over its level at March-end 2020.
The share of short-term debt (with original maturity of up to one year) in total external debt declined to 18.9 per cent at June-end from 19.1 per cent in March-end this year. The ratio of short-term debt (original maturity) to foreign exchange reserves declined to 20.8 per cent at June-end 2020 (22.4 per cent at end-March 2020).
Short-term debt on residual maturity basis (debt obligations that include long-term debt by original maturity falling due over the next 12 months and short-term debt by original maturity) constituted 44 per cent of total external debt at June-end 2020 (42.4 per cent at end-March 2020) and stood at 48.2 per cent of foreign exchange reserves (49.6 per cent at March-end 2020)
Dollar denominated debt
US dollar denominated debt remained the largest component of India’s external debt, with a share of 53.9 per cent at June-end 2020, followed by the Indian rupee (31.6 per cent), yen (5.7 per cent), SDR (4.5 per cent) and the euro (3.5 per cent).
The borrower-wise classification shows that the outstanding debt of both government ($99.9 billion at June-end 2020 as against $100.9 billion at March-end 2020) and non-government ($454.6 billion against $457.5 billion) sectors decreased at June-end 2020.
Debt service (principal repayments plus interest payments) increased to 8.1 per cent of current receipts at June-end 2020 as compared with 6.5 per cent at March-end 2020, reflecting lower current receipts.
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