India’s external debt, at end-March 2023, increased by $5.6 billion to $624.7 billion from the year-earlier period but the external debt to GDP ratio declined to 18.9% at end-March from 20% a year earlier, data released by the Reserve Bank of India (RBI) on Friday show.
Valuation gains due to the appreciation of the U.S. dollar vis-à-vis the Indian rupee and major currencies such as yen, SDR, and euro were placed at $20.6 billion. Excluding the valuation effect, external debt would have increased by $26.2 billion instead of $5.6 billion at end-March 2023 over end-March 2022, the central bank said.
At end-March 2023, long-term debt (with original maturity of above one year) was placed at $496.3 billion, recording a decline of $1.1 billion over the end-March 2022 level.
The share of short-term debt (with original maturity of up to one year) in total external debt increased to 20.6% at end-March 2023 from 19.7% at end-March 2022.
Similarly, the ratio of short-term debt (original maturity) to foreign exchange reserves increased to 22.2% at end-March 2023 (20% at end-March 2022).
Short-term debt on residual maturity basis (i.e., debt obligations that include long-term debt by original maturity falling due over the next 12 months and short-term debt by original maturity) constituted 43.9% of total external debt at end-March 2023 (43.2% at end-March 2022) and stood at 47.4% of foreign exchange reserves (44.0% at end-March 2022).
U.S. dollar-denominated debt remained the largest component of India’s external debt, with a share of 54.6% at end-March 2023, followed by debt denominated in the Indian rupee (29.8%), SDR (6.1%), yen (5.7%), and the euro (3.2%).
Outstanding debt of both government and non-government sectors increased during 2022-23 to $133.3 billion ($130.8 billion in 2021-22) and $491.3 billion ($488.3 billion in 2021-22) respectively.
“The share of outstanding debt of non-financial corporations in total external debt was the highest at 38.9%, followed by deposit-taking corporations (except the central bank) (25.7%), general government (21.3%) and other financial corporations (9.3%),” the RBI said.
Loans remained the largest component of external debt, with a share of 32.5%, followed by currency and deposits (22.6%), trade credit and advances (19.9%) and debt securities (16.7%).
Debt service (i.e., principal repayments and interest payments) increased marginally to 5.3% of current receipts at end-March 2023 as compared with 5.2% at end-March 2022, reflecting higher debt service.
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