As per the standard practice, India's external debt statistics for the quarters ending March and June are released by the Reserve Bank of India and those for the quarters ending September and December by the Ministry of Finance, Government of India. The external debt data are released with a lag of one quarter. The data on external debt outstanding as at end-June 2011 along with revised data for the earlier quarters are set out in Statement 1 and 2. The major developments relating to India’s external debt as at end-June 2011 are presented in the following paragraphs.

Major Highlights

1. India’s external debt, as at end-June 2011, was placed at US$ 317.0 billion recording an increase of US$ 10.5 billion or 3.4 per cent over the level at end-March 2011. About 70 per cent of the increase in total external debt during the quarter was on account of commercial borrowings and short-term trade credits broadly reflecting surge in imports.

2.  Excluding the valuation effects due to the depreciation of the US dollar against other major international currencies and the Indian rupee, the increase in external debt as at end-June worked out to US $ 9.1 billion over end-March 2011.

3. The share of commercial borrowings in total external debt continued to be the highest at 29.4 per cent as at end-June 2011, followed by short-term debt (21.6 per cent), NRI deposits (16.7 per cent) and multilateral debt (15.6 per cent).

4. Based on residual maturity, short-term debt accounted for 43.3 per cent of the total external debt as at end-June 2011. Of this, the share of NRI deposits was the highest at 32.0 per cent. The share of short-term debt, by original maturity, was 21.6 per cent.

5. The ratio of short-term debt to foreign exchange reserves rose marginally to 21.7 per cent as at end-June 2011 from 21.3 per cent as at end-March 2011.

6. The debt denominated in US dollar accounted for the highest share with 54.2 per cent in total external debt as at end-June 2011 followed by the Indian rupee (19.2 per cent) and Japanese Yen (11.1 per cent).

7. The ratio of foreign exchange reserves to external debt as at end June 2011 at 99.6 per cent remained almost at the same level as at end-March 2011.

1. India’s External Debt as at end-June 2011

8. India’s external debt, as at end-June 2011, was placed at US$ 317 billion  recording an increase of US$ 10.5 billion or 3.4 per cent over the end-March 2011 level primarily on account of considerable increase in commercial borrowings, short-term trade credits and NRI deposits.

9. The long-term debt at US$ 248.5 billion and short-term debt at US$ 68.5 billion accounted for 78.4 per cent and 21.6 per cent, respectively, of the total external debt as at end-June 2011.

10. The share of commercial borrowings stood highest at 29.4 per cent in the total external debt as at end-June 2011 followed by short-term debt (21.6 per cent), NRI deposits (16.7 per cent) and multilateral debt (15.6 per cent) (Table 1).

2. Valuation Changes

11. The valuation change over the quarter reflecting the depreciation of the US dollar against other major international currencies and the Indian rupee amounted to US$ 1.4 billion. Therefore, excluding the valuation effects, the stock of external debt as at end-June 2011 showed a lower increase of US $ 9.1 billion over the level at end-March 2011.

3. Components of External Debt

12. Among the components of external debt, the commercial borrowings and short term trade credits accounted for 70 per cent of the rise in total external debt over the quarter broadly reflecting the surge in imports. NRI deposits and multilateral borrowings accounted for about 20 per cent of the increase in total external debt (Table 2).

4. Currency Composition of India’s External Debt

13. The US Dollar denominated debt continued to be the largest component with a share of 54.2 per cent in the total external debt as at end-June 2011. The share of Indian rupee in the total external debt stock accounted for 19.2 per cent, followed by Japanese yen (11.1 per cent), SDR (9.5 per cent) and Euro (3.7 per cent)

5. External Debt by Residual Maturity

14. Based on residual maturity, the short-term debt accounted for 43.3 per cent of total external debt as at end-June 2011. Of this, the share of NRI deposits was the highest at 32.0 per cent. The ratio of short-term debt by residual maturity to foreign exchange reserves worked out to 43.5 per cent at end-June 2011 (Table 3).

6. Government and Non-Government External Debt

15. Government (Sovereign) external debt stood at US$ 78.7 billion as at end-June 2011 as against US$ 78.2 billion as at end-March 2011. The shares of Government and non-Government external debt in the total external debt were 24.8 per cent and 75.2 per cent, respectively, as at end-June 2011 (Table 4).

7. Select Indicators of External Debt

16. While the ratio of India’s foreign exchange reserves to the external debt stock at the end of June 2011 remained more or less at the same level as at end-March 2011, other indicators such as the ratios of concessional debt in total external debt, short-term debt to foreign exchange reserves and short-term debt to total debt showed some deterioration at end-June 2011 as compared to the end-March 2011. Debt service ratio recorded moderate deterioration as at end-June 2011over end-March 2011 on account of higher repayments under commercial borrowings (Table 5).

R. R. Sinha
Deputy General Manager

Press Release : 2011-2012/508