India's external debt currently is $620.7 billion

6 Sep 2022 , 08:53 AM

India’s external debt, which climbed by 8.2% yearly to USD 620.7 billion as of March 2022, is manageable, according to the finance ministry. The second-highest amount of India’s external debt, estimated at 31.2% of it, is in rupees, with 53.2% of it being in US dollars, according to the ministry’s status report on the country’s external debt.

“India still has a tolerable and sustainable level of foreign debt. By the end of March 2022, its value had increased by 8.2% over the previous year to USD 620.7 billion. The ratio of reserves to foreign debt was 978.8%, while the external debt as a proportion of GDP was 19.9% “It read.

The ratio of foreign exchange reserves to external debt as of the end of March 2022 was 97.8%, down from 100.6% the previous month. The study found that the long-term debt, estimated at USD 499.1 billion, accounted for the majority of the total debt (80.4%), while the short-term debt, estimated at USD 121.7 billion, accounted for 19.6%.

The majority of the 96% of the short-term trade credit, or trade credit, was utilized to fund imports. The government debt, which now stands at USD 130.7 billion, has grown by 17.1% over the previous year due to the additional Special Drawing Rights (SDR) that the International Monetary Fund (IMF) would be allotted for 2021—2022.

Commercial borrowings, NRI deposits, and short-term trade credit were listed as the three main non-sovereign debt components, accounting for up to 95.2% of the total. On the other hand, the non-sovereign debt rose 6.1% to USD 490.0 billion more than it was at the end of March 2021.

According to the statement, commercial borrowings climbed by 5.7% and 20.5% to USD 209.71 billion and USD 117.4 billion, respectively, while NRI deposits declined by 2% to USD 139.0 billion.

The analysis highlighted that the debt service ratio significantly dropped from 8.2% in 2021—2022 to 5.2% in 2021—2022 due to robust current revenues and lower foreign debt service payments, however, the signs of debt vulnerability persisted in a benign manner.

The analysis predicts that throughout the following years, the debt service payment requirements brought on by the stock of foreign debt as of end-March 2022 would diminish. It also mentioned that, when seen from a global perspective, India’s external debt is quite modest. The analysis found that both individually and collectively, India’s sustainability outperformed several Low-and Middle-Income Countries (LMICs) in terms of debt vulnerability.

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