Mumbai:
First
the good news. India has moved up the indebtness ladder in the world -
it is now the 10th biggest borrower in the world in 1999 in comparison
to the third biggest borrower in 1991. At the 10th position, it is
ahead of Brazil, the Russian Federation, Mexico, China, Indonesia,
Argentina, Korea, Turkey and Thailand.
Way back in 1991 it was
behind Brazil and Mexico. Analysts say this improvement in position
has come about by:
1) adopting a cautious policy towards capital account convertibility,
and
2) encouraging more of FDI and portfolio type of foreign exchange
inflows instead of debt-related inflows.
Now the bad news. Despite
managing to keep a check on its borrowings, Indias total external
debt in absolute terms has gone up largely due to the strengthening of
the dollar in comparison to the rupee. This means either the
depreciation of the rupee in value terms or the rupees fall in
value terms in comparison to the dollar has resulted in India having
to pay more notwithstanding the fact that it has borrowed less.
Significantly, the rise in
total borrowings in absolute terms has come about despite also the
fact that India has continuously adopted the policy of retiring high
interest debt and replacing it with low-cost one. Thus, whereas in
1991 about Rs 11 constituted one dollar, currently about Rs 48
constitutes one dollar.
As per the information and
data provided by the finance ministry, Indias total external debt,
as on 31 March 2001, moved up to $100.30 billion in comparison to the
$98.40 billion in fiscal 2000 and $99 billion in fiscal 1995. Thus,
for the first time ever, Indias total external debt has crossed the
$100-billion mark.
Some more good news. India
has managed to significantly improve its total external debt ratio as
a percentage of its GDP to 21.40 per cent in fiscal 2001 in comparison
to the 21.90 per cent in fiscal 2000 and 30.80 per cent in fiscal
1995. Similarly, its short-term debt, as a ratio of its total external
debt, has improved to 3.50 per cent in fiscal 2001 in comparison to
the 4.10 per cent in fiscal 2000 and 4.30 per cent in fiscal 1995.
This means its borrowings are more
of a long-term nature.
Nevertheless, Indias
capacity to service its debt when measured, vis--vis its
current receipts, seems to have deteriorated. That means its debt
service ratio as a percentage of current receipts stands lower at
17.10 per cent in fiscal 2001 in comparison to the 16 per cent in
fiscal 2000 and 25.90 per cent in
1995.
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