India’s external debt increases to Rs.632,051 crore (US$142.7 billion)

India's external debt stock increased by US$6.2 billion to US$142.7 billion (Rs.632,051 crore) as at the end of December 2006 from US$136.5 (Rs. 627,112 crore) billion at end-September 2006 (Table 1). The rise in external debt outstanding at end-December 2006 was due to an increase in multilateral debt, external commercial borrowings and NRI deposits, offset by a marginal decline in short-term debt.

While long-term debt outstanding increased over the quarter by US$6,798 million to US$132,641 million, short-term debt declined by US $610 million (5.7 per cent) to US$10,015 million at end-December 2006. Under long-term debt, all the components showed an increase over the quarter. The largest increase was recorded by commercial borrowings; an increase of 11.0 per cent over the quarter taking the amount outstanding to US$ 35,980 million. While multilateral debt rose by US$975 million, bilateral debt showed an increase of US$ 36 million. Export credit outstanding rose by US$299 million. While Rupee debt remained broadly at the same level as at the end of previous quarter, NRI deposits rose by US$1,867 million to US$38,382 million.

Non-Resident deposits continued to account for the largest share of 26.9 per cent in the total debt outstanding at end-December 2006, followed by commercial borrowings at 25.2 per cent and multilateral debt at 24.2 per cent. The share of bilateral debt was 11.1 per cent. Export credit and Rupee debt accounted for 4.2 per cent and 1.4 per cent, respectively. The share of short-term debt was 7.0 per cent as compared to 7.8 per cent at end-September 2006.

India’s foreign currency reserves (foreign currency assets of the RBI, gold, SDRs and Reserve Tranche Position) in the International Monetary Fund was US$177.3 billion at end-December 2006. Foreign currency assets of the RBI stood at US$170.2 billion as on December 31, 2006 providing a cover of around 119 per cent to total external debt stock.

US dollar continued to be the major currency of composition in India’s external debt portfolio. The share of US dollar in the debt stock of the country which increased from 45.4 per cent at end-March 2006 to 46.7 per cent in the quarter ended September 2006, had marginally come down to 46.3 per cent at end-December 2006.

Government continued to pursue prudent external debt management policies to maintain external debt within manageable limits. These include emphasis on raising funds under Government borrowing on concessional terms and from less expensive sources with longer maturities, monitoring of short-term debt, prepaying high cost loans, rationalising interest rates on NRI deposits, restricting end-use of external commercial borrowings, limiting trade credits and encouraging non-debt creating capital flows.

Source : Press Information Bureau

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