External debt increase by USD 40 bn to USD 663.8 bn in FY24: RBI data

"The external debt to GDP ratio declined to 18.7 per cent at end-March 2024 from 19 per cent at end-March 2023," RBI said.
Reserve Bank of India
Reserve Bank of IndiaFile Photo

The country’s external debt has increased by $39.7 billion in the past fiscal to $663.8 billion over the previous fiscal ending March 2023, but the external debt to GDP ratio declined marginally to 18.7 per cent in FY24 from 19 per cent in FY23 due to increase in the size of the GDP, show the RBI data.

If we compare the external debt to the Forex Reserves, the latter is very close at $653 billion, after losing close to $3 billion last week when it had stood at $656 billion.

“At end-March 2024, the country’s external debt was placed at $663.8 billion, an increase of $39.7 billion over its level at end-March 2023. The external debt to GDP ratio declined to 18.7 per cent at end-March 2024 from 19 per cent at end-March 2023,” the central bank said on Tuesday.

Had it not been for the valuation effect due to the appreciation of the US dollar vis-à-vis the rupee and other major currencies such as the Japanese yen, the euro the the Biriths pound which amounted to $8.7 billion, external debt would have increased by $48.4 billion instead of $39.7 billion, the central bank said.

Of the total debt, long-term debt (with original maturity of above one year) stood at $541.2 billion, up $45.6 billion over March 2023, while the share of short-term debt (with an original maturity of up to one year) in total external debt declined to 18.5 per cent as of March 2024 from 20.6 per cent in March 2023. Similarly, the ratio of short-term debt (original maturity) to foreign exchange reserves declined to 19 per cent in March 2024 from 22.2 per cent in March 2023, the data show.

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Short-term debt on residual maturity basis (debt obligations that include long-term debt by original maturity falling due over the next 12 months and short-term debt by original maturity) constitutes 42.9 per cent of the total external debt in March 2024, as against 44 per cent in March 2023 and stood at 44.1 per cent of foreign exchange reserves (47.4 per cent in March 2023).

The US dollar-denominated debt remained the largest component of the country’s external debt, with a share of 53.8 per cent as of end March 2024, followed by debt denominated in the rupee at 31.5 per cent, the yen at 5.8 per cent, the special drawing rights (SDRs) at 5.4 per cent, and the euro at 2.8 per cent.

Outstanding debt of both government and non-government sectors increased during the fiscal under review with the share of outstanding debt of non-financial corporations in total external debt rising to the highest at 37.4 per cent, followed by deposit-taking corporations (except the RBI) at 28.1 per cent, general government at 22.4 per cent and other financial corporations at 7.3 per cent.

Loans remained the largest component of external debt, with a share of 33.4 per cent, followed by currency and deposits at 23.3 per cent, trade credit and advances at 17.9 per cent and debt securities at 17.3 per cent.

Debt service increased to 6.7 per cent of current receipts from 5.3 per cent in March 2023, reflecting higher debt serviceability.

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