India’s external debt rose by 8.2% to $620.7 billion at the end of March, 2022 from a year ago, the Reserve Bank of India said on Thursday. However, the external debt to GDP ratio declined to 19.9% at end of March 2022 from 21.2% at end of March 2021.
Excluding the valuation effect due to the appreciation of the US dollar vis-à-vis Indian rupee and major currencies, India’s external debt would have increased by $58.8 billion instead of $47.1 billion at end of March 2022 over end of March 2021.
At end of March 2022, long-term debt (with original maturity of above one year) was placed at $ 499.1 billion, recording an increase of $26.5 billion over its level at March end 2021. The share of short-term debt (with original maturity of up to one year) in total external debt increased to 19.6% at end-March 2022 from 17.6% at end-March 2021. Similarly, the ratio of short-term debt (original maturity) to foreign exchange reserves increased to 20% at end-March 2022 (17.5% at end-March 2021).
Short-term debt on residual maturity basis constituted 43.1% of total external debt at end of March 2022 (44.1% at end-March 2021) and stood at 44.1% of foreign exchange reserves (43.8% at end of March 2021).
US dollar denominated debt remained the largest component of India’s external debt, with a share of 53.2% at end-March 2022, followed by debt denominated in the Indian rupee (31.2%), SDR (6.6%), yen (5.4%) and the euro (2.9%).
Outstanding debt of both government and non-government sectors increased during 2021-22. The share of outstanding debt of non-financial corporations in total external debt was the highest at 40.3%, followed by deposit-taking corporations at 25.6% (except the central bank) , general government (21.1%) and other financial corporations (8.6%).
Loans remained the largest component of external debt, with a share of 33%, followed by currency and deposits (22.7%), trade credit and advances (19%) and debt securities (17.1%).
Debt service (i.e., principal repayments and interest payments) declined to 5.2% of current receipts at end-March 2022 as compared with 8.2% at end-March 2021, reflecting lower repayments and higher current receipts.