india: India’s external debt rises 8.2 pc to USD 620.7 bn till Mar 2022

According to the finance ministry, India‘s external debt increased by 8.2 percent year on year to USD 620.7 billion as of March 2022. According to the ministry’s status report on India’s external debt, while 53.2 percent of it was denominated in US dollars, Indian rupee-denominated debt, estimated at 31.2 percent, was the second largest.

“India’s external debt continues to be sustainable and prudently managed. As of end-March 2022, it stood at USD 620.7 billion, growing by 8.2 per cent over the level a year ago. External debt as a ratio to GDP was 19.9 per cent, while reserves to external debt ratio were 97.8 per cent,” it said.

Foreign currency reserves as a percentage of external debt were 97.8 percent as of end-March 2022, down from 100.6 percent the previous year. According to the report, long-term debt totaled USD 499.1 billion, accounting for 80.4% of the total, while short-term debt totaled USD 121.7 billion, accounting for 19.6% of the total.

The sovereign debt increased by 17.1% year on year to USD 130.7 billion, owing primarily to the International Monetary Fund‘s (IMF) additional allocation of Special Drawing Rights (SDR) during 2021-22.

Non-sovereign debt, on the other hand, increased by 6.1% to USD 490.0 billion as of end-March 2021, according to the report, with commercial borrowings, NRI deposits, and short-term trade credit accounting for up to 95.2 percent of the total.

While NRI deposits fell by 2% to USD 139.0 billion, commercial borrowings at USD 209.71 billion and short-term trade credit at USD 117.4 billion increased by 5.7% and 20.5%, respectively.

The debt service ratio fell significantly to 5.2 percent during 2021-22 from 8.2 percent the previous year, reflecting buoyant current receipts and moderating external debt service payments, according to the report, which noted that the debt vulnerability indicators remained benign.

The debt service payment obligations arising out of the stock of external debt as of end-March 2022 are projected to trend downwards over the coming years, it said, adding that from a cross-country perspective, India’s external debt is modest.

In terms of various debt vulnerability indicators, India’s sustainability was better than the Low-and Middle-Income Countries (LMICs) as a group and vis-a-vis many of them individually, it said.

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