Major Highlights

• India’s total external debt is placed at US $ 123.3 billion at the end of March 2005 (Chart 1).
• In nominal terms the external debt stock increased by US $ 11.6 billion (10.4 per cent) during 2004-05 - the highest accretion in any single year starting from 1990-91.

• External commercial borrowings (ECB), trade credits (short-term and long-term), multilateral debt and NRI deposits were the key drivers to the growth in the external debt stock.

• Bilateral and rupee debt have recorded a decline (Chart 3).

• The rise in ECB by around US $ 5 billion during the year reflected strong investment demand domestically as well as favourable financing conditions overseas.

• ECB mainly took the form of syndicated loans and issues of bonds including foreign currency convertible bonds (FCCBs), as spreads on emerging market bonds narrowed down substantially.

• Short-term debt recorded the highest growth (69.8 per cent) during the year reflecting the sharp rise in both POL and non-POL imports (Table 1).

• External assistance (both concessional and non- concessional) to the Government from multilateral agencies increased substantially during 2004-05.

• There was a prepayment of debt amounting to US $ 35.1 million in 2004-05 as compared with prepayments of US $ 3.8 billion and US $ 2.9 billion in 2003-04 and 2002-03, respectively.

• The ratio of short-term to total debt posted a modest rise. This was also reflected in an upward movement in the ratio of short-term debt to foreign exchange reserves (Table 2).