Mumbai: India's total external debt has declined from 21.1 per cent of GDP in 2001-02 to 15.8 per cent of GDP in 2005-06, finance minister P Chidambaram informed the Sabha during question hour.
Around 36.4 per cent of the country's total external debt comprised of loans raised by Indian corporates through external borrowings, export credit and short-term credits, the finance minister said.
The share of government debt in total external debt was 33.4 per cent, while non-government debt accounted for the remaining portion in December last year, he said.
He said the government was pursuing a ''prudent'' external debt management policy by raising funds on concessional terms and from less expensive sources with longer maturities, among other things.
This has forced the Reserve Bank of India (RBI) to keep in abeyance measures announced in October for greater liberalisation of external commercial borrowings (ECBs).
In its review of the credit policy in October 2006, the RBI had said it would allow banks to borrow through the ECB route up to 50 per cent of their Tier-I capital, subject to a cap of $10 million, but this would include borrowing for export credit. Earlier, banks were allowed to borrow 25 per cent of their Tier-I capital, excluding any loans taken for on-lending to exporters.
A day ahead of the presentation of the monetary policy, the RBI said, "In view of the prevailing market conditions and likely impact on liquidity, it has been decided to keep the operationalisation of the policy announcement in abeyance."
Loans raised by the private sector from international capital markets with maturities of more than three years are classified as ECBs.
The latest external debt data released by the government show that commercial borrowings from global sources have risen by 11 per cent to $35.98 billion in December 2006 from $32.46 billion in September 2006.
Commercial borrowing accounted for 25.2 per cent of India's $ 142.7 billion external debt in December 2006. In the previous quarter, commercial borrowings represented 23.8 per cent of the total external debt of $136.5 billion.
During fiscal 2006-07, the government had put a $22 billion ceiling on external commercial borrowings (ECBs), with a $500 million cap on individual company borrowings.
Long-term debt outstanding increased over the quarter by $6.798 billion to $132.641 billion, while short-term debt declined by $610 million ( 5.7 per cent) to $10.015 billion as on December-end 2006.
With domestic interest rate firming up, deposits by non-resident Indians have also gone up by Rs1,867 crore ( 5.1 per cent) to Rs38,382 crore at December-end 2006.
Inflationary pressures in the last few weeks have led to a rise in the value of the rupee. The rupee touched a nine-year high against the dollar on Monday. The RBI is likely to continue tough measures to check liquidity growth and prevent a further rupee rise.
The RBI has identified ECBs as one of the "major contributors to capital inflows". "Higher recourse to ECBs was enabled by lower spreads on external borrowings and rising financing requirements for capacity expansion domestically," the RBI has pointed out.