Swap scheme added $31.2 bn to India's external debt: RBI

30 August 2014

India's external debt rose $31.2 billion (or 7.6 per cent) to $440.6 billion at end-March 2014 over the level at end-March 2013, on the back of increased flows of long-term deposits from non-resident Indians.

The surge in NRI deposits reflected the impact of fresh FCNR(B) deposits mobilised under the swap scheme during September-November 2013 to tide over the difficult BoP situation in the initial parts of the year, data released by the Reserve Bank of India showed.

At end-March 2014, long-term external debt stood at $351.4 billion, showing an increase of 12.4 per cent from the end-March 2013 level. At this level, long-term external debt accounted for 79.7 per cent of total external debt at end-March 2014 vis--vis 76.4 per cent at end-March 2013.

Short-term external debt stood at $89.2 billion at end-March 2014, showing a decline of 7.7 per cent over $96.7 billion at the end-March 2013. This was due to the compression in imports arising from the slowdown in aggregate demand and restrictions on gold imports. Thus, the share of short-term external debt in total external debt declined from 23.6 per cent at end-March 2013 to 20.3 per cent at end-March 2014.

Government (sovereign) external debt stood at $81.5 billion at end-March 2014 vis-a-vis $81.7 billion at end-March 2013. The share of government external debt in total external debt was lower at 18.5 per cent at end-March 2014 as compared to 19.9 per cent at end-March 2013.

According to the RBI, India's external debt has remained within manageable limits as indicated by the external debt-GDP ratio of 23.3 per cent and debt service ratio of 5.9 per cent during 2013-14. External debt of the country continues to be dominated by the long-term borrowings.

A cross-country comparison based on `International Debt Statistics 2014' of the World Bank, which is based on the debt data for 2012, shows that India continues to be among the less vulnerable countries with its external debt indicators, comparing well with other indebted developing countries. India's key debt indicators, especially debt to GNI and debt service ratios continue to be comfortable, according to the release.

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