India’s external debt increased by $8.5 billion in the April-June period to $482.9 billion as at June-end 2015 due to higher commercial borrowings and NRI deposits, according to the Reserve Bank of India.
The RBI observed that excluding valuation gains due to appreciation of the US dollar against the Indian rupee and other major currencies, the increase in external debt during the quarter would have been higher at $10.1 billion.
Commercial borrowings continued to be the largest component of external debt with a share of 38.4 per cent, followed by NRI deposits (24.8 per cent) and short-term trade credit (16.6 per cent).
The share of short-term debt (original maturity) in total debt declined (to $84.4 billion) over the preceding quarter ($84.7 billion) as well as over the corresponding quarter of the previous year ($90.1 billion) as foreign institutional investors’ investment in government treasury bills was phased out.
Accordingly, the ratio of short-term debt (original maturity) to foreign exchange reserves declined to 23.7 per cent as at end-June 2015 (24.8 per cent as at end-March 2015).
Similarly, on residual maturity basis, the ratio of short-term debt to foreign exchange reserves worked out to 51.9 per cent at end-June 2015 (54.2 per cent at end-March 2015).
The US dollar denominated debt continued to be the largest component of India’s external debt with a share of 58.1 per cent at end-June 2015, followed by Indian rupee (28.4 per cent), Special Drawing Rights (5.9 per cent), Japanese Yen (3.9 per cent) and Euro (2.3 per cent).