India’s external debt rose by 8.2 per cent year-on-year to USD 620.7 billion as of March 2022, which in accordance to the finance ministry is sustainable.
While 53.2 per cent of it was denominated within the US greenback, Indian rupee-denominated debt, estimated at 31.2 per cent, was the second largest, as per the standing report on India’s external debt launched by the ministry.
“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 mentioned.
Foreign forex reserves as a ratio to external debt stood barely decrease at 97.8 per cent as of end-March 2022 than 100.6 per cent a yr in the past.
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The report mentioned the long-term debt estimated at USD 499.1 billion constituted the biggest chunk of 80.4 per cent, whereas the short-term debt at USD 121.7 billion accounted for 19.6 per cent of the full.
The short-term commerce credit score was predominantly within the type of commerce credit score (96 per cent) financing imports.
The sovereign debt at USD 130.7 billion rose larger by 17.1 per cent over its degree a yr in the past, primarily due to the extra allocation of Special Drawing Rights (SDR) by the International Monetary Fund (IMF) throughout 2021-22.
The non-sovereign debt, alternatively, grew 6.1 per cent to USD 490.0 billion over the extent as of end-March 2021, it mentioned, including business borrowings, NRI deposits and short-term commerce credit score are the three largest constituents of the non-sovereign debt, accounting for as a lot as 95.2 per cent.
While NRI deposits declined by 2 per cent to USD 139.0 billion, business borrowings at USD 209.71 billion and short-term commerce credit score at USD 117.4 billion rose by 5.7 per cent and 20.5 per cent, respectively, it mentioned.
Observing that the debt vulnerability indicators continued to be benign, the report mentioned the debt service ratio fell considerably to 5.2 per cent throughout 2021-22 from 8.2 per cent within the earlier yr, reflecting buoyant present receipts and moderating external debt service funds.
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The debt service cost obligations arising out of the inventory of external debt as of end-March 2022 are projected to pattern downwards over the approaching years, it mentioned, including that from a cross-country perspective, India’s external debt is modest.
In phrases of varied debt vulnerability indicators, India’s sustainability was higher than the Low-and Middle-Income Countries (LMICs) as a gaggle and vis-a-vis lots of them individually, it mentioned.
