External Debt of India

India's external debt stands at USD 510.4 billion by end-Sep'18.

Published quarterly by the Reserve Bank of India (RBI). Updated till end-September 2018. (Published on December 31st, 2018)

Recent Data Trend

India's external debt witnessed a decline to USD 510.4 billion by end-Sep'18 recording a decrease of USD 19.3 billion over the level at end-Mar'18.

The decrease in external debt during this period (Apr-Sep'18) was primarily due to a decrease in commercial borrowing, non-resident Indian (NRI) deposits and short-term debt. The decline was seen in commercial borrowings (0.3% YoY), short-term debt (12.5% YoY) and Non-resident Indian (NRI) deposits (3.3% YoY) in the last 12 months.

Commercial borrowing continued to account (37.1%) as the largest component of external debt followed by NRI deposits (23.9%). The share of short-term debt in total external debt increased to 20.4% from 19.3% by end-Mar'18. Along with this, the ratio of short-term debt to foreign exchange reserves saw an increase to 26.1% by end-Sep'18. The share of long-term debt in total external debt was at 79.6%.

Regarding the ability to pay the debt, the forex reserves seems to be strong at 79.2% of the total external debt at end-Sep'18. The decrease in the magnitude of external debt was primarily due to valuation gains resulting from the appreciation of the US dollar against the Indian rupee and major currencies. We feel that the country continues to be in a comfortable position in terms of external debt, and the healthy cushion of forex reserves would likely mitigate any concerns prevailing.

External Debt-Annual

Brief Overview

The RBI and the Ministry of Finance (MoF) jointly release the external debt stock position of India. The Reserve Bank of India releases India's external debt statistics for the quarters ending March and June with a lag of one quarter and those for the quarters ending September and December by the finance ministry.

External debt, otherwise known as foreign debt, is the component of total debt held by creditors of the foreign nations. Debt can be in the form of money owed to banks (Asian Development Bank (ADB), International Bank for Restructuring and Development (IBRD))outside the domestic nation or borrowings from the global financial institutions like the World Bank and International Monetary Fund (IMF).

The external debt in India is classified as long-term debt and short-term debt. The long-term debt consists of external commercial borrowings, borrowings from global financial institutions like IMF(Multilateral Debt), borrowings from private banks (Bilateral Debt), trade credit, NRI deposits, etc. On the other hand, short-term debt comprises of FII investments in government T-bills, investment in T-bills by foreign central banks, external debt liabilities of commercial banks and RBI.

External debt of the country continues to be dominated by long-term borrowings. India continues to be among the less vulnerable nations with its external debt indicators, comparing well with other indebted developing countries. Among BRICS economies, India is in the fourth position after China, Brazil, and Russia regarding the total debt stock and the third position regarding the share of short-term debt to total debt. The prudent external debt policy pursued by the government has helped in maintaining foreign debt within manageable limits.

A cross-country comparison based on International Debt Statistics 2017 of the World Bank shows that the ratio of India’s external debt stock to gross national income (GNI) at 23.4% was the fifth lowest. Regarding the cover provided by foreign exchange reserves to external debt, India’s position was sixth highest at 69.7% in 2015.

India's External Debt Position as on end-March 2015 (in USD Billion)

1 Total  External Debt

1.1 Long-term Debt 389.2
1.1.1 Multilateral Debt 52.4 Government borrowing 43 Concessional Loans 24.7 IDA Loans 24.3
1.1.2 Bilateral Debt 21.7
1.1.3 Loans from IMF 5.5
1.1.4 Trade Credit 12.6
1.1.5 Commercial Borrowings 180.3 Commercial Bank Loans 101.5 Securitized Borrowings (incl.IDBs and FCCBs) 78.4 
1.1.6 NRI Deposits 115.2 
1.1.7 Rupee Debt 1.5 
1.2 Short-term Debt 85.5 
1.2.1 Short-term Trade Credit 81.6 

Note: Figures may not add up due to the omission of some sub-categories.

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Next Release Date: To be decided.