The Hindu : External debt rises to $109.6 b

Online edition of India's National Newspaper
Wednesday, Oct 01, 2003

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External debt rises to $109.6 b

By Our Special Correspondent

MUMBAI SEPT. 30. India's external debt increased by 4.8 per cent in the first quarter of the current financial year, mainly on account of an increase in deposits from non-resident Indians (NRIs), external commercial borrowings (ECBs) by corporates and short-term trade credit.

External debt of the country increased by $5 billion to $109.6 billion at end-June 2003 from $104.6 billion as at end-March 2003. "The increase in external debt during the quarter under review (April-June 2003) was mainly on account of increase in NRI deposits ($2.6 billion), ECBs ($1.1 billion) and short-term trade credit ($900 million),'' stated a press release issued here today by the Reserve Bank of India.

The increase in NRI deposits by $2.6 billion was mainly on account of an increase in NRE deposits by $2.7 billion as there was an outflow of $100 million in FCNR(B) deposits. The increase in NRE deposits includes reinvestment of maturity proceeds of NR(NR)RD scheme — which was discontinued with effect from April 1, 2002 — of around $0.4 billion.

"Increase in ECBs reflected rise in borrowing by corporates in the face of low international interest rates. Trade credit increase has been the result of sharp increase in India's imports,'' the RBI stated.

The largest component of India' overall external debt as at end-June 2003 was multilateral debt accounting for 27.6 per cent, followed by NRI deposits (25.3 per cent), ECBs (21.4 per cent) and bilateral debt (15.5 per cent).

Short-term debt increased significantly from $4.6 billion as at end-March 2003 to $5.8 billion as at end-June 2003 due to increase in both components of short-term debt, NRI deposits and short term trade credit.

The concessional debt as a proportion of total debt declined from 36.9 per cent as at end-March 2003 to 35.5 per cent as at end-June 2003.

Despite considerable growth in short-term debt (27.7 per cent) during April-June 2003, the proportion of such debt in the overall debt stock remains modest at 5.3 per cent, the RBI added.

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