India’s external debt zooms to $345.8 billion

India's external debt, as at end-March 2012, stood at $345.8 billion (20 per cent of the country's GDP), recording an increase of $39.9 billion or 13 per cent over the end-March 2011 level. The spike has been due mainly to a significant increase in commercial borrowings, short-term trade credits, and rupee denominated non-resident Indian deposits, Reserve Bank of India data showed.

This was $51.8 billion higher than the country's external debt for the previous fiscal (2010-11) even after adjusting the valuation effects due to appreciation of US dollar against the rupee, RBI noted.

The valuation effect reflecting the appreciation of the dollar against the rupee resulted in a decrease in India's external debt by $11.9 billion during 2011-12.

Commercial borrowings accounted for 30.2 per cent of the total external debt of the country while short-term debt had a share of 22.6 per cent, NRI deposits 16.9 per cent and multilateral debt had a share of 14.6 per cent.

India's short-term debt increased by $13.2 billion on account of rise in short-term trade credits, FII investment in T-bills and commercial banks borrowings.

The debt service ratio increased to 5.6 per cent during 2011-12 from 4.2 per cent during 2010-11.