As one of the 15-largest foreign creditors to the US, India’s exposure to the United States’ ballooning debts is estimated at $41 billion - higher than the money America owes to countries like France and Australia.
The overall national debt of the US is moving nearer to $15 trillion, out of which it owes over $4.5 trillion to foreign countries holding the US government debt securities.
While China is the single-largest holder of the US treasury securities with $1.15 trillion, India stands at 14th position with $41 billion (about Rs 1.83 lakh crore), as per the US Treasury Department.
The unprecedented debt downgrade of the US from the top-notch ‘AAA’ level by Standard and Poor’s might also lead to an immediate action by Reserve Bank of India, which allows holding of government debt securities of countries with mostly a ‘Triple-A’ rating.
While a vast majority of the $41 billion portfolio is owned by RBI itself, some Indian banks also might have some exposure, sources said.
They said that the RBI was most likely to allow holding of the US securities even with a notch-lower rating, as it has been itself amassing the US treasury securities over the past one year despite a deepening debt crisis there. The Indian holding has grown by about $10 billion in the past one year, the US Treasury data shows.
The RBI holds the US treasury securities as part of its foreign exchange reserves and the dollar holdings account for about 10 per cent of its total portfolio.
Some experts pointed out that India has been increasing its exposure on the pretext that the US debt bonds were one of the most secure from default risks.