India’s external debt grows by 8.2 per cent in a year

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Sandeep Dikshit

New Delhi, September 5

India's external debt grew by 8.2 per cent at the end of March this year as compared to a year ago.

Debt at March 2022-end was over $620.7 billion as against $573.7 billon as at March 2021-end.

While 53.2 per cent of it was denominated in US dollar, Indian rupee denominated debt, estimated at 31.2 per cent, was the second largest, according to the External Debt Management Unit (EDMU) in the Ministry of Finance.

In a silver lining, external debt as a ratio to GDP fell marginally to 19.9 per cent. Foreign currency reserves as a ratio to external debt stood slightly lower at 97.8 per cent as at end-March 2022 than 100.6 per cent a year ago, according to the 28th edition of the Status Report on India's External Debt 2021-22.

Also, the debt service ratio fell to 5.2 per cent during 2021-22 from 8.2 per cent during 2020-21 due to buoyancy in current receipts and a decline in debt service payments.

The debt service payment obligations arising out of the stock of external debt as at end-March 2022 are projected to trend downwards over the coming years, said the report.

Long-term debt estimated at $ 499.1 billion, constituted the largest chunk of 80.4 per cent, while short-term debt, at $121.7 billion, accounted for 19.6 per cent of the total.

The short-term trade credit was predominantly in the form of trade credit (96 per cent) financing imports.

As at end-March 2022, sovereign external debt (SED) amounted to $130.7 billion, increasing by 17.1 per cent over the level a year ago, reflecting the additional allocation of SDRs by the IMF during 2021-22.

SDRs rose to $22.9 billion from $ 5.5 billion as at March 2021-end.

Non-sovereign external debt, estimated at $ 490.0 billion as at March 2022-end, posted a growth of 6.1 per cent over the level a year ago.

The Tribune