Government borrowings accounted for just under one-fourth of India’s total external debt of $345.8 billion in 2011-12, with the bulk of the liability coming from companies’ external commercial borrowings (ECBs).
With sovereign debt equivalent to 4.7 per cent of India’s Gross Domestic Product (GDP), the situation is better now than in 2009, when sovereign debt amounted to 5.1 per cent of the GDP.
According to statistics released by the RBI, of India’s total sovereign debt of $81.9 billion, 77 per cent was in lieu of external assistance provided by various multilateral agencies and partner nations, while the remainder was defence debt and liabilities toward investment by FIIs, foreign central banks, international institutions and the IMF in treasury bills and government securities.
This was the highest level of government debt in value terms in the last seven years.
Rising Short-term debt
Other external debt, owed by non-government agencies, has crept up steadily over the years to hit $263.9 billion in 2011-12, which was equivalent to 15.3 per cent of the GDP.
In terms of the maturity profile of debt, short-term debt has been rising as a proportion of overall external debt.
The percentage was at an all-time high, at 22.6 per cent ($78.1 billion) by the end of March 2012. However, the bulk of the country’s external debt is in the form of long-term borrowings, which accounts for over three-fourth of the total liabilities at $267.6 billion.
Of the long-term debt, ECBs accounted for 30.2 per cent, while NRI deposits made up 16.9 per cent.
Furthermore, loans and assistance from multilateral and bilateral organisations constituted 14.6 per cent and 7.7 per cent of India’s long-term debt.
Trade credit (5.8 per cent), IMF assistance (1.8 per cent) and rupee-denominated debt (0.4 per cent) constituted the remainder of the country’s long-term debt.
In terms of the residual maturity of external debt, outstanding debt as of end-March, 2012, $147.4 billion had a term less than one year, while $26.7 billion was due in 1-2 years and $28 billion in 2-3 years. The remaining $143.6 billion had a tenure of more than three years.