India’s external debt rises to 21.1% of GDP at $570 bn

Valuation loss due to the depreciation of the US dollar vis-à-vis Indian rupee and major currencies such as euro, SDR and pound sterling was placed at $6.8 billion. Excluding the valuation effect, the increase in external debt would have been $4.7 billion instead of $11.5 billion at end-March 2021 over end-March 2020.

Commercial borrowings remained the largest component of external debt, with a share of 37.4 per cent, followed by non-resident deposits (24.9 per cent) and short-term trade credit (17.1 per cent).

At end-March 2021, long-term debt (with original maturity of above one year) was placed at $468.9 billion, recording an increase of $17.3 billion over its level at end-March 2020.

The share of short-term debt (with original maturity of up to one year) in total external debt declined to 17.7 per cent at end-March 2021 from 19.1 per cent at end-March 2020; the ratio of short-term debt (original maturity) to foreign exchange reserves declined to 17.5 per cent at end-March 2021 (22.4 per cent at end-March 2020).

Short-term debt on residual maturity basis (ie, debt obligations that include long-term debt by original maturity falling due over the next twelve months and short-term debt by original maturity) constituted 44.6 per cent of total external debt at end-March 2021 (42.4 per cent at end-March 2020) and stood at 44.1 per cent of foreign exchange reserves (49.6 per cent at end-March 2020).

US dollar denominated debt remained the largest component of India’s external debt, with a share of 52.1 per cent at end-March 2021, followed by the Indian rupee (33.3 per cent), yen (5.8 per cent), SDR (4.4 per cent) and the euro (3.5 per cent).

The borrower-wise classification shows that the outstanding debt of both government and non-government sectors increased at end-March 2021.

The share of outstanding debt of non-financial corporations in total external debt was the highest at 40.4 per cent, followed by deposit-taking corporations (except the central bank) (28.2 per cent), government (18.8 per cent) and other financial corporations (8.1 per cent).

The instrument-wise classification shows that the loans were the largest component of external debt, with a share of 34.8 per cent, followed by currency and deposits (25.2 per cent), trade credit and advances (17.6 per cent) and debt securities (17.0 per cent).

Debt service (principal repayments plus interest payments) increased to 8.2 per cent of current receipts at end-March 2021 as compared with 6.5 per cent at end-March 2020, reflecting higher repayments and lower current receipts.