India's external debt burden easing, says new report

India's external debt has remained within manageable limits and the debt servicing burden has, in fact, come down despite the increase in absolute terms and the changing composition.

The external debt to GDP ratio of the country came down to 17.3 per cent in 2010-11 from 22.5 per cent in 2000-01 and 38.7 per cent in 1991-92 while the debt service ratio came down to 4.2 per cent in 2010-11 from 16.6 per cent in 2000-01 and 30.2 per cent in 1991-92, the finance ministry said in a new report.

The steady improvement in India's external indebtedness position has been due to prudent external debt management policy followed by the government, especially in monitoring long and short-term debt, raising sovereign loans on concessional terms with longer maturities and regulating external commercial borrowings, according to the annual report, 'India's External Debt: A Status Report 2010-11'.

As of end-March 2011, India's external debt stock stood at $305.9 billion, up $44.9 billion (17.2 per cent) over the end-March 2010 level of $261.0 billion.

The increase in external debt has been due mainly to higher commercial borrowings and short-term trade credits, which is in line with high growth of the economy and strong domestic demand in 2010-11, the report said.

The share of commercial borrowing in total external debt has increased to 28.9 per cent as of end-March 2011 from 19.7 per cent at end-March 2005.