As per the extant practice, India's external debt statistics for the quarters ending March and June are compiled and released by the Reserve Bank of India and for the quarters ending September and December are compiled and released by the Ministry of Finance, Government of India. The external debt statistics are released with a lag of one quarter. A detailed account of external debt as compiled in the standard format as at end-June 2009 in rupee and US dollar terms and revised data for the earlier quarters are set out in Statement 1 and 2, respectively.

Major Highlights of External Debt

1. India’s external debt stood at US$ 227.7 billion at the end of June 2009. The increase in external debt by US$ 3.7 billion over end-March 2009 level was mainly due to increase in long term external debt, particularly Non-Resident Indian (NRI) deposits.
   
   
2. Excluding the valuation effects due to depreciation of US dollar against other major currencies and Indian rupee during the first quarter of the financial year 2009-10, the stock of external debt as at end-June 2009 would have declined by US$ 1.3 billion as compared to the stock as at end-March 2009.
   
   
3. The share of US dollar denominated debt in the total external debt declined to 54.4 per cent as at end-June 2009 from 56.3 per cent as at end-March 2009.
   
   
4. Based on the original maturity, the share of short-term to total debt declined to 17.8 per cent at end-June 2009 from 19.5 per cent at end-March 2009.
   
   
5. Based on the residual maturity, the short-term debt accounted for 39.1 per cent of the total external debt at end-June 2009.
   
   
6. The share of non-Government debt in the total external debt declined marginally to 74.8 per cent as at end-June 2009 from 75.5 per cent as at end-March 2009.
   
   
7. The debt service ratio declined steadily during the last three years and stood at 4.6 per cent as at end-March 2009. The debt service ratio for April-June 2009 worked out to 5.5 per cent.

1. India’s External Debt as at the end of June 2009

1. India’s external debt was placed at US$ 227.7 billion at the end of June 2009 as compared to US$ 224.0 billion as at end of March 2009. The increase in the external debt outstanding as at end-June 2009 by US$ 3.7 billion or 1.7 per cent over the end-March 2009 level was mainly due to the increase in long term external debt, particularly Non-Resident Indian (NRI) deposits (Table 1 and Chart 1). The external debt outstanding as at end-June 2009 increased by US$ 3.4 billion or 1.5 per cent over the end-June 2008 level.

2. Valuation Changes

1. The valuation effect reflecting the depreciation of the US dollar against other major international currencies and Indian rupee during the first quarter of the financial year 2009-10 resulted in an increase in the external debt by US$ 5.0 billion as compared to the end-March 2009 level. This implies that excluding the valuation effect, the stock of external debt as at end-June 2009 would have declined by US$ 1.3 billion over the end-March 2009 level.

3. Components of External Debt

1. By way of composition of external debt, the share of commercial borrowings (27.7 per cent) continued to be the highest followed by NRI deposits (19.6 per cent), multilateral debt (18.1 per cent), short-term debt (17.8 per cent) and bilateral debt (9.4 per cent) as at end-June 2009 (Table 2).
   
   
2. The long-term debt at US$ 187.1 billion and short-term debt at US$ 40.6 billion accounted for 82.2 per cent and 17.8 per cent, respectively, of the total external debt as at end-June 2009.
   
   
3. The increase in long-term debt by US$ 6.7 billion as at end June 2009 was mainly due to the increase in NRI deposits.
   
   
4. External commercial borrowings showed a marginal increase of US$ 645 million over end-March 2009, mainly due to increase in commercial bank loans and FII investment in Government securities and corporate bonds.
   
   
5. Short-term debt at US$ 40.6 billion, however, declined by US$ 3.0 billion as at end-June 2009 as compared to the level of end-March 2009 mainly on account of decline in short-term  trade credit (up to 6 months) (Table 3 and Chart 2).
   
   
6. Short-term trade credit stood lower at US$ 37.1 billion as at end-June 2009 as compared with US$ 40.2 billion at end-March 2009.
   
   
7. Outstanding NRI deposits at US$ 44.6 billion as at end-June 2009 increased by US$ 3.0 billion over the level at end-March 2009 on account of increase in inflows under NRI deposit schemes reflecting a positive influence of hike in ceiling interest rates in a phased manner during 2008-09.

4. External Commercial Borrowings

1. The ECB approval for April-June 2009 stood lower at US$ 2.7 billion as compared with US$ 3.8 billion for the corresponding quarter of the previous year. As a result, there was a lower disbursement of ECB during April-June 2009 (Table 4).

5. Currency Composition

1. While the US dollar is generally used as the numeraire currency for computing external debt in order to facilitate international comparison, the currency composition of the external debt is essential to understand the currencies in which the debt is actually denominated. It gives an idea of the extent of exposure of the economy to cross currency exchange rate movements. The currency composition of India’s external debt is generally disseminated in terms of major foreign currencies such as US dollar, Japanese Yen, Euro, Pound Sterling, Special Drawing Rights (SDR) and the domestic currency i.e., Indian Rupee.
   
   
2. The US dollar continues to remain the predominant currency accounting for 54.4 per cent of the total external debt stock as at end-June 2009. However, there was a decline in the share of US dollar dominated external debt as compared to its share in the external debt as at end-March 2009.
   
   
3. There was an increase in the share of Japanese yen (14.6 per cent), Indian rupee (14.3 per cent), SDR (9.6 per cent) and Euro (4.4 per cent) in the total external debt as at end-June 2009 as compared to its share in the external debt as at end-March 2009 (Table 5 and Chart 3).

6. Instrument-wise Classification of External Debt

1. The instrument-wise classification of India’s external debt as at end-June 2009 reveals that the share of ‘loans’ in the total external debt outstanding accounted for 53.8 per cent as compared to 53.1 per cent as at end-March 2009 (Table 6).
   
   
2. The group ‘currency and deposits’ and ‘trade credits’ together accounted for 48.6 per cent of the total non-Government debt as at end-June 2009 as compared with 49.0 per cent as at end-March 2009.

7. Short-term Debt

1. The short-term debt has become an important component for measuring the liquidity and refinancing risks. In the recent years, efforts have been made to expand the coverage of short-term external debt. The data on short-term debt now includes suppliers’ credit up to and above 180 days, FII investments in Government debt, investment by foreign central banks and international institutions in Treasury Bills and external liabilities of central banks and commercial banks.
   
   
2. Short-term debt by original maturity as at end-June 2009 declined to US$ 40.6 billion as against US$ 43.6 billion as at end-March 2009 mainly due to decline in short-term trade credits.
   
   
3. The share of trade related credits in total short-term debt stood at 91.3 per cent as at end-June 2009.
   
   
4. The ratio of trade credits to imports declined to 13.6 per cent as at end-March 2009 as against 16.3 per cent as at end-March 2008 (Table 7).

8. External Debt by Residual Maturity

1. While external debt is generally compiled in terms of original maturity, analysing the external debt, in particular, short term debt in terms of residual maturity is important from the point of view of foreign exchange liquidity management and to ascertain the total foreign exchange outgo on account of debt service payments in the immediate future.
   
   
2. The ‘short-term debt by residual maturity’ comprises repayments due under medium and long-term debt by original maturity during one year reference period along with the short-term debt with original maturity. The balance constitutes the long-term debt by residual maturity.
   
   
3. As at end-March 2009, the revised short-term debt by residual maturity stood at US$ 87.5 billion, which has increased to US$ 89.1 billion as at end-June 2009.
   
   
4. Based on residual maturity, the short-term debt accounted for 39.1 per cent of total external debt as at end-June 2009. The ratio of short-term debt by residual maturity to foreign exchange reserves worked out to 33.6 per cent at end-June 2009 (Table 8).

9. Government and Non-Government External Debt

1. Government (Sovereign) external debt stood at US$ 57.5 billion as at end-June 2009, while non-Government debt amounted to US$ 170.2 billion.
   
   
2. The share of non-Government debt in total external debt has increased steadily since March 2003. However, the share of non-Government debt in total external debt declined to 74.8 per cent as at end-June 2009 as compared to 75.5 per cent as at end-March 2009 (Table 9 and Chart 4).

10. Debt Service Payments

1. India’s debt service ratio has improved progressively over the years owing to the combined effect of moderation in debt service payments and growth in external current receipts. The debt service ratio had declined from a peak of 35.3 per cent in 1990-91 to 5.9 per cent in 2004-05 but increased to 10.1 per cent during 2005-06 due to repayments relating to the India Millennium Deposits. The debt service ratio declined to 4.6 per cent during 2008-09.  The debt service ratio for April-June 2009 stood at 5.5 per cent (Table 10).

2. Based on outstanding long-term debt, as at end-March 2009, the total debt service payments will be higher at US$ 22.8 billion during 2012-13. The repayment of NRI deposits and FII investment in debt securities are not included in the projections. The projections do not include future debt service obligations arising out of fresh borrowings.
   
   
3. At end-March 2009, the projected debt service payments for External Commercial Borrowings (ECBs) and Foreign Currency Convertible Bonds (FCCBs) revealed that the principal repayments between 2011-12 and 2012-13 would be higher (Table 11).

11. Sustainability of India’s External Debt

1. An assessment of sustainability of external debt is generally undertaken based on the trends in certain key ratios such as debt to GDP ratio, debt service ratio, short-term debt to total debt and total debt to foreign exchange reserves. India has managed its external debt successfully as reflected in the perceptible improvement in various external debt sustainability indicators (Table 12).
   
   
2. The ratio of external debt to GDP has increased  to 21.4 per cent as at end-March 2009 from 18.9 per cent as at end-March 2008.
   
   
3. The debt service ratio declined steadily during the last three years and stood at 4.6 per cent as at end-March 2009. The debt service ratio for April-June 2009 worked out to 5.5 per cent.
   
   
4. India’s foreign exchange reserves provide a cover of 116.5 per cent to the external debt stock at the end of June 2009 as compared to 112.5 per cent at end-March 2009 (Chart 5).
   
   
5. The share of concessional debt in total external debt increased marginally to 19.0 per cent as at end-June 2009 from 18.7 per cent at end-March 2009.
   
   
6. The ratio of short-term debt to foreign exchange reserves at 15.3 per cent as at end-June 2009 was lower compared to 17.3 per cent as at end-March 2009.
   
   
7.  The ratio of short-term to total debt declined to 17.8 per cent at end-June 2009 from 19.5 per cent at end-March 2009.

1. According to the latest data available on Global Development Finance Online Database, World Bank, the international comparison of external debt of the twenty most indebted countries manifests that India was the fifth most indebted country in 2007  as compared with third position in 1990 (Table 13).
   
   

Table 13: Total External Debt Outstanding
(US $ billion)
Country Name	1990	2000	2004	2005	2006	2007
1	2	3	4	5	6	7
All developing countries	1,283.1	2,177.8	2,636.5	2,633.0	2,858.4	3,466.0
1.  China	55.3	145.7	247.7	283.8	325.1	373.6
2.  Russian Federation	..	160.0	196.8	229.9	250.5	370.2
3.  Turkey	49.4	116.8	160.7	169.3	207.8	251.5
4.  Brazil	119.7	241.6	219.5	187.4	193.5	237.5
5.  India	83.8	101.3	133.0	138.1	171.3	223.3
6.  Poland	49.4	64.8	105.3	108.2	139.0	195.4
7.  Mexico	104.4	150.9	171.2	167.9	160.5	178.1
8.  Indonesia	69.9	144.3	139.6	132.8	130.8	140.8
9.  Argentina	62.2	140.9	162.4	125.0	115.9	127.8
10. Kazakhstan	..	12.4	32.8	43.4	74.1	96.1
11. Romania	1.1	11.2	29.6	38.9	54.0	85.4
12. Ukraine	..	12.2	30.2	33.3	49.9	73.6
13. Philippines	30.6	58.3	61.0	61.7	60.3	65.8
14. Thailand	28.1	79.7	51.3	51.4	55.0	63.1
15. Chile	19.2	37.3	43.8	45.4	48.0	58.6
16. Malaysia	15.3	41.9	52.2	52.0	56.5	53.7
17. Croatia	..	12.4	33.0	30.6	38.4	48.6
18. Colombia	17.2	33.9	37.9	37.7	38.9	45.0
19. South Africa	..	24.9	27.1	31.1	35.5	43.4
20. Venezuela, RB	33.2	42.0	39.3	45.7	44.6	43.1
Note: The source data for India is Government of India and Reserve Bank of India. Therefore, the data for India pertain to financial year (April-March) and not calendar year.
Source: Global Development Finance Online Database, World Bank, Ministry of Finance, Government of India and Reserve Bank of India



2. The element of concessionality in India’s external debt portfolio was the third highest after Indonesia and Philippines (Table 14).
   
 
3. India’s debt service ratio was third lowest with China and Malaysia having first and second lowest debt service ratio, respectively.
   
 
4. In terms of ratio of external debt to Gross National Product (GNP), India’s position was sixth lowest, with China having the lowest ratio of external debt to GNP.
   
 
5. India’s position with respect to short-term debt to total external debt was eighth lowest with Mexico having the lowest ratio of short-term debt to total external debt.
   
6. In terms of reserves to total debt, India’s position was third, similar to that of Thailand, as China and Malaysia had higher reserves to debt ratio than India.
   
   

Table  14: International Comparison of Top Twenty Debtor Countries, 2007
	External debt stocks, total (US $ billion)	Concessional debt/Total debt (EDT) (%)	Debt service ratio (%)	External Debt to GNP(%)	Short-term debt/Total debt (EDT) (%)	Forex Reserves to Total Debt (%)
1	2	3	4	5	6	7
China	373.6	10.1	2.2	11.6	54.5	413.9
Russian Federation	370.2	0.4	9.1	29.4	21.4	129.1
Turkey	251.5	2.1	32.1	38.8	16.6	30.4
Brazil	237.5	1.0	27.8	18.7	16.5	75.9
India	223.3	19.8	4.8	18.9	20.5	138.7
Poland	195.4	0.4	25.6	47.7	30.9	33.6
Mexico	178.1	0.6	12.5	17.7	5.1	49.0
Indonesia	140.8	26.2	10.5	33.9	24.8	40.4
Argentina	127.8	1.3	13.0	49.7	29.8	36.1
Kazakhstan	96.1	1.0	49.6	103.7	12.2	18.4
Romania	85.4	1.6	19.1	51.5	35.7	46.8
Ukraine	73.6	2.2	16.9	52.9	31.1	44.1
Philippines	65.8	20.0	13.7	41.9	10.8	51.2
Thailand	63.1	9.6	8.1	26.5	34.3	138.7
Chile	58.6	0.4	14.2	40.3	22.7	28.7
Malaysia	53.7	6.1	4.6	29.4	28.4	189.9
Croatia	48.6	2.1	33.0	97.7	10.5	28.1
Colombia	45.0	2.1	22.0	22.5	11.9	46.6
South Africa	43.4	0.0	5.9	15.8	38.2	75.9
Venezuela, RB	43.1	0.5	7.4	18.7	27.1	78.2
Source: Data for India as published by national authorities for 2007-08 and those for other countries as at end-December 2007 as available in World Bank’s Global Development Finance Online Database.



7. The Quarterly External Debt Statistics (QEDS) database, jointly developed by the World Bank and the International Monetary Fund, brings out detailed external debt data of countries that are subscribing to IMF’s Special Data Dissemination Standard/ General Data Dissemination System. The position in respect of the 63 reporting countries for the fourth quarter of the calendar year 2008 and the first quarter of the calendar year 2009, which has been published by the World Bank http://go.worldbank.org/6V603CE490 is given at Annex I .
   
   

Annex I : Gross External Debt Position of QEDS Reporting Countries for End-December 2008 and End-March 2009
(US$ billion)
Sr. No.	Countries	2008Q4			2009Q1
		Short-Term	Long-Term	Total	Short-Term	Long-Term	Total
1	2	3	4	5	6	7	8
1	Hong Kong,China	483.9	176.1	659.9	486.1	154.4	640.5
2	Russian Federation	73.0	410.4	483.5	60.2	390.6	450.8
3	Turkey	50.6	226.6	277.1	48.1	217.2	265.3
4	Brazil	36.4	226.5	262.9	32.4	227.6	259.9
5	India	46.3	182.6	228.9	43.6	180.4	224.0
6	Mexico	24.2	176.2	200.4	23.8	145.4	169.3
7	Indonesia	20.5	134.6	155.1	17.8	133.3	151.0
8	Argentina	35.1	93.1	128.2	36.0	91.5	127.5
9	Kazakhstan	10.2	97.6	107.8	8.6	96.5	105.1
10	Ukraine	20.3	81.4	101.7	18.8	80.4	99.2
11	Romania	26.3	75.3	101.6	22.8	72.5	95.3
12	Malaysia	30.7	44.7	75.3	30.4	43.2	73.6
13	South Africa	25.5	46.3	71.8	23.3	44.1	67.4
14	Chile	14.3	50.5	64.8	12.7	52.1	64.9
15	Thailand	20.4	44.6	65.1	18.5	43.0	61.5
16	Croatia	6.7	48.1	54.8	5.3	46.9	52.2
17	Colombia	5.7	40.7	46.4	4.8	42.0	46.8




Annex I: Gross External Debt Position of QEDS Reporting Countries for End-December 2008 and End-March 2009
(US$ billion)
Sr. No.	Countries	2008Q4			2009Q1
		Short-Term	Long-Term	Total	Short-Term	Long-Term	Total
1	2	3	4	5	6	7	8
18	Armenia	0.5	3.0	3.4	0.5	3.1	3.6
19	Australia	223.0	547.3	770.3	209.4	544.2	753.7
20	Austria	266.7	566.1	832.8	250.9	533.9	784.8
21	Belarus	7.6	7.6	15.2	7.5	8.8	16.3
22	Belgium	962.0	392.3	1,354.3	872.4	374.0	1,246.4
23	Bolivia	0.3	5.7	5.9	0.2	5.7	5.9
24	Bulgaria	18.5	32.6	51.1	17.5	31.0	48.5
25	Canada	304.7	457.5	762.2	313.4	460.9	774.3
26	Costa Rica	4.0	5.2	9.2	3.6	5.2	8.7
27	Czech Republic	25.9	54.5	80.4	22.9	50.6	73.4
28	Denmark	300.1	285.0	585.1	281.4	293.8	575.2
29	Ecuador	1.6	16.5	18.1	0.0	0.0	0.0
30	Egypt	2.8	29.3	32.1	2.5	28.4	30.9
31	El Salvador	1.5	9.1	10.7	1.2	9.3	10.5
32	Estonia	10.1	16.8	26.8	8.8	15.6	24.4
33	Finland	113.1	219.1	332.2	118.4	231.2	349.7
34	France	2,138.5	2,863.2	5,001.7	1,999.5	2,723.7	4,723.2
35	Georgia	1.0	6.7	7.7	0.8	6.9	7.7
36	Germany	1,723.7	3,526.1	5,249.8	1,635.9	3,363.7	4,999.6
37	Greece	155.6	349.0	504.6	148.9	342.3	491.3
38	Hungary	26.2	186.0	212.1	26.5	181.4	207.9
39	Ireland	1,110.6	1,201.1	2,311.7	1,056.3	1,196.7	2,253.0
40	Israel	33.2	52.9	86.1	31.4	52.7	84.1
41	Italy	807.0	1,521.2	2,328.2	800.9	1,509.2	2,310.1
42	Japan	1,415.6	815.1	2,230.6	1,341.1	747.9	2,088.9
43	Korea	151.1	230.0	381.1	148.1	221.2	369.3
44	Kyrgyz  Republic	0.4	3.1	3.5	0.4	3.0	3.4
45	Latvia	14.1	28.0	42.1	10.5	27.5	38.0
46	Lithuania	8.2	24.3	32.5	6.9	23.1	30.0
47	Luxembourg	1,163.5	769.5	1,933.0	1,126.0	696.6	1,822.6
48	Moldova	1.4	2.7	4.1	1.4	2.6	4.0
49	Netherlands	1,090.6	1,379.0	2,469.6	1,047.6	1,355.3	2,402.9
50	Norway	276.9	281.6	558.5	258.0	285.9	543.9
51	Paraguay	0.7	2.8	3.5	0.0	0.0	0.0
52	Peru	6.1	28.4	34.6	4.6	29.6	34.1
53	Poland	51.0	192.7	243.6	45.6	177.1	222.6
54	Portugal	180.4	304.4	484.7	173.3	296.8	470.2
55	Slovak Republic	20.1	32.4	52.5	24.1	29.1	53.3
56	Slovenia	16.2	38.2	54.4	12.7	37.2	49.9
57	Spain	694.2	1,618.4	2,312.6	686.0	1,554.2	2,240.2
58	Sweden	303.2	314.3	617.6	292.9	306.9	599.8
59	Switzerland	912.8	392.2	1,305.0	891.9	380.0	1,271.9
60	Tunisia	4.3	16.5	20.8	4.0	15.5	19.4
61	United Kingdom	6,798.4	2,371.5	9,169.8	6,444.9	2,290.6	8,735.5
62	United States	5,414.4	8,227.4	13,641.8	5,169.4	8,230.5	13,399.9
63	Uruguay	0.1	10.6	10.7	0.1	10.9	11.0


Ajit Prasad
Manager

Press Release : 2009-2010/509