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India’s external debt increased by about 6 per cent year-on-year (or by $ 39.7 billion) to $663.8 billion as at March-end 2024 against $624.1 billion as at March-end 2023.
However, as a ratio to GDP, it declined to 18.7 per cent at end-March 2024 from 19 per cent at end-March 2023.
The country’s external debt comprises loans, currency and deposits, trade credit and advances and debt securities.
“Valuation effect due to the appreciation of the US dollar vis-à-vis the Indian rupee and other major currencies such as yen, the euro and SDR (special drawing rights) amounted to $8.7 billion. Excluding the valuation effect, external debt would have increased by $48.4 billion instead of $39.7 billion at end-March 2024 over end-March 2023,” per a RBI statement.
Debt service (that is principal repayments and interest payments) increased to 6.7 per cent of current receipts at end-March 2024 from 5.3 per cent at end-March 2023, reflecting higher debt service, it added.
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At end-March 2024, long-term debt (with original maturity of above one year) increased by about 8 per cent y-o-y (or by $ 45.6 billion) to $541.2 billion over end-March 2023 level.
Short-term debt on residual maturity basis (that is debt obligations that include long-term debt by original maturity falling due over the next twelve months and short-term debt by original maturity) constituted 42.9 per cent of total external debt at end-March 2024 (44.0 per cent at end-March 2023).
Share of components
Short-term debt stood at 44.1 per cent of foreign exchange reserves (47.4 per cent at end-March 2023).
US dollar-denominated debt remained the largest component of India’s external debt, with a share of 53.8 per cent at end-March 2024 (54.6 per cent as at March-end 2023).
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This was followed by debt denominated in the Indian rupee (31.5 per cent vs 29.8 per cent as at March-end 2023), yen (5.8 per cent vs 5.7 per cent), SDR (5.4 per cent vs 6.1 per cent) and euro (2.8 per cent vs 3.2 per cent).
Loans remained the largest component of external debt, with a share of 33.4 per cent (32.5 per cent as at March-end 2023), followed by currency and deposits (23.3 per cent vs 22.6 per cent as at March-end 2023), trade credit and advances (17.9 per cent vs 19.9 per cent) and debt securities (17.3 per cent vs 16.7 per cent).
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