The nation is faced with a flurry of debate on the state of the Indian economy, the study of which is basically a study of contrasts. Consider these:

Inflation is down, the rupee is weakening, interest rates are down, the stock markets are firming up, the forex kitty is bulging, while the international credit rating institutions are not yet ready to give 'investment' grade to India

For all practical purposes, the Indian economy woke up from its deep slumber only in 1991. Liberalisation, globalisation, reduced tariffs, market economy and such other jargon were only talked about in whispers before that. Where does India stand now, compared to its developing counterparts? Though an exhaustive study on all the economic indicators would be ideal, I strive to track just the external debt situation of the top 15 debtor countries in the world in 1997.

India's external debt's highlights are given in the following table in US$ billion:

The debt grew in US dollar terms at a compounded annual rate of 1.6 per cent and in Rupee terms by 12.5 per cent between March 1991 and March 1998. In the same period, the GDP at current market prices grew by 15.1 per cent per annum on a compounded basis. The drop, you would have noticed in the external debt to GDP ratio, is on account of these two factors.

Between March 1998 and December 1998, the external debt grew by US$ 1.81 billion. This is mainly because of the success of   floated by the Indian government in August 1998.

One of the important constituents in any country's debt, is the short term component. This shows the vulnerability of the country in the near term. The higher the short term component, the lesser is the access available to the country for international funds. Roll over or refinancing may not be available. On maturity, such short term debt would strain the balance of payments position. This component should be carefully kept at manageable levels.

On this account, India is in a comfortable position. A look at the tables below will confirm that for you. Figures as of end 1997 are available with us. The debt to GNP is one of the lowest for India among the top 15 list, though it is the eighth top borrower in the world. Indonesia, Malaysia and the Philippines comparatively have a huge short term exposure. No wonder their currencies collapsed in 1997-98. But we still have a long way to go before strengthening our debt service to exports ratio. Interest payments have to be matched year after year through higher exports. That is the only way this ratio can be improved.

The short term debt to reserves position is quite safe. The inference one can draw is that our reserves are more than five times the size of the short term debt. India also enjoys the highest percentage of concessional debt (see table below) granted among all top debtor countries. In proportion to the external debt, it is a high of 41 per cent as compared to say, China's 12.3.

The following table gives you a picture of the percentage of India's external debt currency-wise. As is obvious, the more the rupee remains stable vis--vis the dollar, the better it will be. The debt burden increases as the dollar increases and vice-versa. It also depends on how the Euro and Yen fair against the dollar in the future and what effect these cross-currency fluctuations have on the rupee.

In the next few years the government expects the external debt scenario to increase in the following manner.

(RIBs): The Indian government managed to raise US$ 4.23 billion from non-resident Indians in August 1998. The details of the collection are given below:

These bonds mature in 2003-2004. Collection was highest from Middle East countries with 36.7 per cent share. Interestingly, the US$ 3.9 billion collected at 7.75 per cent should be considered quite competitive since it is just 2.2 per cent higher than the long term US treasury bonds. Countries such as Argentina, Brazil, the Czech Republic, South Korea, Turkey and Venezuela have all raised funds offering much higher rates.

For a table showing the comparison of international sovereign credit ratings in 1998,

The ratings and bond issues listed in the above tables show the country's relative position in the international market. Particularly interesting is the rate at which the have been garnered, compared to other nation's instruments.

Are these not signs of hope even for the diehard pessimist?