The Hindu : Business : External debt up 5.5 p.c. at $190.5 b

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Tuesday, Jan 01, 2008
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External debt up 5.5 p.c. at $190.5 b

Special Correspondent

Weak dollar is the main reason

Rise in ECBs, NRI deposits, multilateral debt
Debt servicing ratio declines to 4.5 per cent

NEW DELHI: India’s external debt stock, as at the end of September this fiscal, stood at $190.5 billion (Rs. 757,967 crore), showing an increase of about $9.9 billion or 5.5 per cent over the previous quarter ending June 2007.

Of this, around $5 billion is explained by valuation change arising out of the weakening of the U.S. dollar against the rupee and major international currencies.

According to an official statement here on Monday, external debt stock in dollar terms during April-September 2007, rose by $21 billion (12.3 per cent).

Of this, $7 billion is accounted for by the depreciation of the U.S. dollar in the international market.

In rupee terms, the increase in external debt during the period under review was only about 2.4 per cent which works out to Rs. 17,868 crore. The increase in external debt was essentially brought about by a rise in external commercial borrowings, NRI deposits, multilateral debt and short-term debt, the statement said.

The share of long-term debt in the total external debt at end-September this year was 83.8 per cent or $159.7 billion.

Component-wise, under the long-term debt, multilateral and bilateral debt increased by $1 billion and $80 million to $37.1 billion and $16.7 billion, respectively. Export credit outstanding showed an increase of $80 million to touch $8.5 billion, the statment added.

Commercial borrowings

The stock of commercial borrowings at $51.8 billion and non-resident Indian (NRI) deposits at $43.6 billion were higher by $4 billion and $1 billion, respectively, as compared to those at the end of the preceding quarter. Rupee debt remained broadly at the same level of about $2 billion as at the end of the previous quarter. Commercial borrowings accounted for the highest share of 27.2 per cent in total external debt outstanding at end-September 2007, and NRI deposits 22.9 per cent followed by multilateral debt at 19.5 per cent and bilateral debt at 8.7 per cent.

Export credit and rupee debt accounted for 4.5 per cent and 1.1 per cent, respectively.

FII investment

In respect of short-term debt, the coverage, the statement said, had been made more comprehensive, with the inclusion of suppliers’ credits up to six months and investment by foreign institutional investors (FII) in short-term debt instruments

As at the end of September this year, short-term debt stood at $30.8 billion, accounting for 16.2 per cent of the total external debt.

The total external debt at end-September 2007, when considered in terms of sovereign debt ($51.3 billion) and private debt ($139.2 billion), was in the ratio of 26.9:73.1, it added.

While the foreign exchange reserves cover for external debt rose to 130 per cent at end-September this year, debt servicing as a proportion of gross external current receipts (debt-service ratio) declined from 9.9 per cent in 2005-06 to 4.8 per cent in 2006-07 and further to 4.5 per cent during April-September 2007.

The major currency of denomination in India’s external debt portfolio continued to be the U.S. dollar, accounting for 52.8 per cent of total external debt till the end of September, the official statement said.

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