As per the standard practice, India's external debt statistics are released with a lag of one quarter. The external debt data as at end-September 2018 in Indian rupees and US dollars as well as revised data for earlier quarters are set out in Statements 1 and 2, respectively. The major developments relating to India’s external debt as at end-September 2018 are presented below.

Highlights

At end-September 2018, India’s external debt witnessed a decline of 3.6 per cent over its level at end-March 2018, on account of a decrease in commercial borrowings and non-resident Indian (NRI) deposits. The decrease in the magnitude of external debt was primarily due to valuation gains resulting from the appreciation of the US dollar against the Indian rupee and major currencies. The external debt to GDP ratio stood at 20.8 per cent at end-September 2018, higher than its level of 20.5 per cent at end-March 2018.¹

Major highlights pertaining to India’s external debt at end-September 2018 are presented below:

• At end-September 2018, India’s external debt was placed at US$ 510.4 billion, recording a decrease of US$ 19.3 billion over its level at end-March 2018 (Table 1).

• Valuation gains due to the appreciation of the US dollar vis-à-vis the Indian rupee and major currencies (viz., SDR, yen, euro, and pound sterling) were placed at US$ 25.4 billion. Excluding the valuation effect, the increase in external debt would have been US$ 6.1 billion instead of a decrease of US$ 19.3 billion at end-September 2018 over end-March 2018.

• Commercial borrowings continued to be the largest component of external debt with a share of 37.1 per cent, followed by NRI deposits (23.9 per cent) and short-term trade credit (19.9 per cent).

• At end-September 2018, long-term debt (with original maturity of above one year) was placed at US$ 406.1 billion, recording a decline of US$ 21.4 billion over its level at end-March 2018.

• The share of long-term debt (original maturity) in total external debt at end-September 2018 was 79.6 per cent, lower than its level of 80.7 per cent at end-March 2018.

• The share of short-term debt (with original maturity of up to one year) in total external debt increased to 20.4 per cent at end-September 2018 from 19.3 per cent at end-March 2018. The ratio of short-term debt (original maturity) to foreign exchange reserves increased to 26.1 per cent at end-September 2018 (24.1 per cent at end-March 2018).

• Short-term debt on a residual maturity basis (i.e., debt obligations that include long-term debt by original maturity falling due over the next twelve months and short-term debt by original maturity) constituted 43.8 per cent of total external debt at end-September 2018 (42.0 per cent at end-March 2018) and stood at 55.8 per cent of foreign exchange reserves (52.3 per cent at end-March 2018) (Table 2).

• US dollar denominated debt continued to be the largest component of India’s external debt with a share of 49.7 per cent at end-September 2018, followed by the Indian rupee (36.1 per cent), SDR (5.3 per cent), yen (4.7 per cent) and euro (3.2 per cent).

• The borrower-wise classification shows that the outstanding debt of both government and non-government sectors decreased at end-September 2018 (Table 3).

• Debt service payments declined to 6.5 per cent of current receipts at end-September 2018 as compared with 7.5 per cent at end-March 2018 (Table 4) – reflecting lower repayments of external commercial borrowings.

Ajit Prasad
Assistant Adviser

Press Release : 2018-2019/1505

¹ The ratio is based on external debt and GDP valued in rupee terms.