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 with a lag of one quarter and those for the quarters ending September and December by the Ministry of Finance, Government of India. The external debt data as at end-March 2016 in rupees and US dollars as well as revised data for the earlier quarters are set out in Statements 1 and 2, respectively. The major developments relating to India’s external debt as at end-March 2016 are presented below.

Highlights

India’s external debt at end-March 2016 witnessed an increase of 2.2 per cent over its level at end-March 2015, primarily on account of a rise in outstanding NRI deposits. Furthermore, the increase in the magnitude of external debt was partly offset by valuation gain resulting from the appreciation of the US dollar vis-a-vis the Indian rupee and other major currencies. The external debt to GDP ratio stood at 23.7 per cent at end-March 2016, a shade lower than its level of 23.8 per cent at end-March 2015.

Major highlights pertaining to India’s external debt as at end-March 2016 are presented below:

• India’s external debt at end-March 2016 was placed at US$ 485.6 billion, recording an increase of US$ 10.6 billion over its level at end-March 2015 (Table 1).

• Valuation gain, due to appreciation of the US dollar against the Indian rupee and other major currencies, was placed at US$ 5.9 billion. Excluding the valuation effect, the increase in external debt would have been higher by US$ 16.4 billion at end-March 2016 over the level at end-March 2015.

• Commercial borrowings continued to be the largest component of external debt with a share of 37.3 per cent, followed by NRI deposits (26.1 per cent) and short-term trade credit (16.5 per cent).

• The share of short-term debt (original maturity) in total debt witnessed a decline over the corresponding quarter of the previous year. Similarly, the ratio of short-term debt (original maturity) to foreign exchange reserves declined to 23.1 per cent as at end-March 2016 (25.0 per cent as at end-March 2015).

• On residual maturity basis, short-term debt constituted about 42.6 per cent of total external debt at end-March 2016 (38.2 per cent at end-March 2015) and stood at 57.4 per cent of total foreign exchange reserves (53.2 per cent at end-March 2015) (Table 2). The rise in short-term debt (residual maturity) mainly reflects payments due on account of maturing of FCNR(B) deposits mobilised under the special swap scheme in 2013.

• US dollar denominated debt continued to be the largest component of India’s external debt with a share of 57.1 per cent at end-March 2016, followed by Indian rupee (28.9 per cent), SDR (5.8 per cent), Japanese Yen (4.4 per cent) and Euro (2.5 per cent).

• Across borrower categories, the outstanding debt of Government as well as non-Government debt increased and their shares in total external debt were 19.2 per cent and 80.8 per cent, respectively, at end-March 2016 (Table 3).

• Debt service payments increased to 8.8 per cent of current receipts at end-March 2016 as compared to 7.6 per cent at end-March 2015 (Table 4).

Alpana Killawala
Principal Adviser

Press Release : 2015-2016/3047