External Debt

India's external debt stands at USD 543 billion by end-Mar'19.

Published quarterly by the Reserve Bank of India (RBI). Updated till Janurary-March 2019 (Published on July 1st, 2018).

Recent Data Trend

India's external debt for at end-Mar'19 witnessed an increase of 2.6% YoY (USD 13.7 billion) and stood at USD 543 billion compared to USD 529.3 billion in the year-ago period. The increase was mainly attributed to a rise in short-term debt, commercial borrowings, and NRI deposits. However, the ratio between India's external debt and the gross domestic product was 19.7% at end-Mar'19, lower than 20.1% at the same time last year. 

The external commercial borrowing which represents Indian companies' foreign borrowings (accounting for around 40% of total external debt) rose to a three-quarter high of 2.27% YoY at end-Mar'19. The short-term debt and NRI deposits increased by 6.11% YoY and 3.36% YoY during the same period, respectively. Along with this, the increase in the magnitude of external debt was partially offset by valuation gains of USD 16.7 billion resulting from the appreciation of the US dollar against the Indian rupee and major currencies.

Regarding the ability to pay the debt, the forex reserves continue to be strong at 76% of total external debt at end-Mar'19, although it is less as compared to 80.2% of total external debt at end-Mar'18. The ratio of short-term debt to foreign exchange reserves also stayed strong witnessing an increase to 26.3% by end-Mar'19.  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

Note: The years in the graph represent the fiscal year, for instance, the year 2009 represents the period Apr'08-Mar'09.

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.