NEW DELHI: India’s external debt declined by $13.1 billion, or 2.7 per cent, to $471.9 billion at the end of March this year compared to the level at end-March 2016, driven by a drop in long-term debt like NRI deposits and commercial borrowings.
External debt, according to ‘India’s External Debt: A Status Report 2016-17’ by the Department of Economic Affairs, remained within manageable limits and the situation was better in 2016-17 over 2015-16. The external debt-GDP ratio fell to 20.2 per cent at the end of March 2017 from 23.5 per cent at March 2016.
“At end-March 2017, long-term external debt was $383.9 billion, showing a decrease of 4.4 per cent over the level at end-March 2016. Long-term external debt accounted for 81.4 per cent of total external debt at end-March 2017 compared to 82.8 per cent at end-March 2016,” a finance ministry said. External debt of the country continues to be dominated by the long-term borrowing.
“Short-term external debt increased by 5.5 per cent to $88 billion at end-March 2017. This is mainly due to the increase in trade-related credits, a major component of short-term debt with a share of 98.3 per cent,” the report noted.
Government (sovereign) external debt increased from $93.4 billion at end-March 2016 to $95.8 billion at end-March 2017 and constituted 20.3 per cent of the total external debt. A cross-country comparison based on ‘International Debt Statistics 2017’ of the World Bank, which presents the debt data for 2015, shows that India continues to be among the less vulnerable countries with its external debt indicators comparing well with other indebted developing countries.
The ratio of India’s external debt stock to gross national income was the fifth lowest and in terms of the cover provided by foreign exchange reserves to external debt, the position was sixth highest in 2015.