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India’s External Debt as at the end of June 2010

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 2010 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 2010 are presented in the following paragraphs.

Major Highlights

(i) India’s external debt, as at end-June 2010, was placed at US$ 273.1 billion recording an increase of US$ 10.8 billion or 4.1 per cent over the level at end-March 2010 on account of significant increase in short-term trade credits, commercial borrowings and multilateral government borrowings.

(ii) Excluding the valuation effects due to appreciation of US dollar against other major international currencies and the Indian Rupee, the increase in external debt works out to US$ 12.1 billion over the quarter.

(iii) The share of commercial borrowings stood highest at 27.3 per cent as at end-June 2010 followed by short-term debt (21.2 per cent), NRI deposits (17.6 per cent) and multilateral debt (16.4 per cent).

(iv) Based on residual maturity, short-term debt accounted for 42.5 per cent of the total external debt as at end-June 2010, while the share of short-term debt, by original maturity, was 21.2 per cent.

(v) The ratio of short-term debt to foreign exchange reserves rose to 21.0 per cent as at end-June 2010 from 18.8 per cent as at end-March 2010.

(vi) External debt in terms of US dollar accounted for 59.8 per cent of the total external debt stock as at end-June 2010 followed by the Indian rupee (13.2 per cent).

(vii) The ratio of foreign exchange reserves to external debt as at end June 2010 came down to 101.0 per cent from 106.4 per cent as at end-March 2010.

1. India’s External Debt as at end-June 2010

(i) India’s external debt, as at end-June 2010, was placed at US$ 273.1 billion recording an increase of US$ 10.8 billion or 4.1 per cent over the end-March 2010 level on account of significant increase in short-term trade credits, commercial borrowings and multilateral government borrowings.

(ii) The long-term debt at US$ 215.2 billion and short-term debt at US$ 57.8 billion accounted for 78.8 per cent and 21.2 per cent, respectively, of the total external debt as at end-June 2010.

(iii) The share of commercial borrowings continued to be the highest at 27.3 per cent in the total external debt as at end-June 2010 followed by short-term debt (21.2 per cent), NRI deposits (17.6 per cent) and multilateral debt (16.4 per cent) (Table 1).

Table 1 : External Debt by Component

(US $ million)

Item

End- March

End-June

2008

2009

2010PR

2009

2010 P

1

2

3

4

5

6

1. Multilateral

39,490

39,538

42,755

41,236

44,679

 

(17.6)

(17.6)

(16.3)

(18.0)

(16.4)

2. Bilateral

19,708

20,613

22,592

21,377

22,933

 

(8.8)

(9.2)

(8.6)

(9.3)

(8.4)

3. IMF

1120

1018

6041

1057

5885

 

(0.5)

(0.5)

(2.3)

(0.5)

(2.2)

4. Trade Credit

10,328

14,490

16,878

14,844

17,583

 

(4.6)

(6.5)

(6.4)

(6.5)

(6.4)

5. ECBs

62,334

62,413

71,967

62,961

74,465

 

(27.8)

(27.8)

(27.4)

(27.4)

(27.3)

6. NRI Deposits

43,672

41,554

47,890

44,579

48,108

 

(19.5)

(18.5)

(18.3)

(19.4)

(17.6)

7. Rupee Debt

2,017

1,527

1,657

1,607

1,584

 

(0.9)

(0.7)

(0.6)

(0.7)

(0.6)

8. Long-term Debt (1to 7)

178,669

181,153

209,780

187,662

215,237

 

(79.6)

(80.7)

(80.0)

(81.7)

(78.8)

9. Short-term Debt

45,738

43,362

52,471

42,029

57,841

 

(20.4)

(19.3)

(20.0)

(18.3)

(21.2)

Total (8+9)

224,407

224,515

262,251

229,691

273,078

P: Provisional; PR : Partially Revised.

IMF: International Monetary Fund; ECBs: External Commercial Borrowings; NRI: Non-Resident Indian.

Note: Figures in parentheses are percentage to total external debt.

Source: Ministry of Finance, Government of India and Reserve Bank of India.

2. Valuation Changes

Compared with the previous quarter (end-March 2010), the valuation effect reflecting the appreciation of the US dollar against other major international currencies and the Indian rupee resulted in a decline of US$ 1.3 billion in India’s external debt. This implies that excluding the valuation effects, the stock of external debt as at end-June 2010 would have increased by US$ 12.1 billion over the level at end-March 2010 (Table 2).

Table 2: Valuation Effect on External Debt

US$ million)

External debt end-June 2010

Total Variation over end-March 2010

Valuation
Loss(-)/Gain(+)

Variation net of Valuation

1

2

3

4= (2-3)

 2,73,078

10,826

-1,291

12,117

3. Components of External Debt

Almost all the components of external debt registered increase over the quarter. While short term debt rose somewhat steeply by US$ 5.4 billion, the commercial borrowings and loans under external assistance (multilateral and bilateral debt) increased by US$ 2.5 billion and US$ 2.3 billion, respectively, as at end-June 2010 over end-March 2010 (Table 3).

Table 3: External Debt by Components – Outstanding and Variation

(US$ million)

Item

Outstanding at the end-of

Absolute variation

Percentage Variation

Jun 2009

Mar 2010

Jun 2010 P

Jun-10 over
Jun-09

Jun-10 over
Mar-10

Jun-10 over 
Jun-09

Jun-10 over 
Mar-10

1

2

3

4

5

6

7

8

1. Multilateral

41,236

42,755

44,679

3,443

1,924

8.3

4.5

2. Bilateral

21,377

22,592

22,933

1,556

341

7.3

1.5

3. IMF

1057

6041

5885

4,828

-156

456.8

-2.6

4. Trade Credit

14,844

16,878

17,583

2,739

705

18.5

4.2

5.Commercial Borrowings

62,961

71,967

74,465

11,504

2,498

18.3

3.5

6. NRI Deposits

44,579

47,890

48,108

3,529

218

7.9

0.5

7. Rupee Debt

1,607

1,657

1,584

-23

-73

-1.4

-4.4

8. Short-Term Debt

42,029

52,471

57,841

15,812

5,370

37.7

10.2

Of which:
(i) Short-Term Trade Credit

38,501

47,615

53,194

14,693

5,579

38.2

11.7

Total Debt (1 to 8)

229,691

262,252

273,078

43,387

10,826

18.9

4.1

Memo Items

 

A. Long-Term Debt (1 to 7)

187,662

209,780

215,237

27,575

5,457

14.7

2.6

B. Short-Term Debt

42,029

52,471

57,841

15,812

5,370

37.7

10.2

P: Provisional; PR : Partially Revised.

Source: Ministry of Finance, Government of India and Reserve Bank of India.

4. Currency Composition of India’s External Debt

The US Dollar denominated debt continues to be the largest component with a share of 59.8 per cent in the total external debt as at end-June 2010. The share of Indian rupee in the total external debt stock accounted for 13.2 per cent as at end-June 2010 followed by Japanese yen (11.5 per cent), SDR (10.0 per cent) and Euro (3.3) (Table 4).

Table 4: Currency Composition of External Debt

(Percentage share in total external debt)

 

End-March

End-June

 Currency

2008

2009

2010

2009

2010 P

1

2

3

4

5

6

US Dollar

55.3

54.1

53.3

54.4

59.8

SDR

10.6

9.8

10.7

9.6

10.0

Indian Rupee

16.2

15.4

18.7

14.3

13.2

Japanese Yen

12.0

14.3

11.4

14.6

11.5

Euro

3.5

4.1

3.6

4.4

3.3

Pound Sterling

2.2

2.0

1.8

2.3

1.8

Others

0.2

0.3

0.5

0.4

0.4

Total

100

100

100

100

100

P: Provisional; PR : Partially Revised

Source: Ministry of Finance, Government of India and Reserve Bank of India.

5. Instrument-wise classification of External Debt

(i) The instrument-wise classification of India’s external debt across the borrower category reveals that the share of loans in total debt outstanding remained at around 49 per cent as at end-June 2010, nearly the same as at end-March 2010 (Table 5).

(ii) The share of trade credit (long-term and short-term) was 20.2 per cent and that of currency and deposits was 17.9 per cent in India’s total external debt showing a marginal increase over the quarter.

Table 5 : Instrument-wise Classification of External Debt Outstanding

(US$ million)

Sr. No.

Borrower

End-March 2010

End-June 2010

1

2

3

4

A.

Government (1+2)

67,066

68,911

1

Short-Term

1519

1548

 

(i) Money Market Instruments

1519

1548

2

Long-term {(i)+(ii)+(iii)}

59,506

61,478

 

(i) Bonds and Notes

3,026

3235

 

(ii) Loans

55,101

56,857

 

(iii) Trade Credit

1,379

1,386

3

Other debt liabilities

6,041

5,885

 

IMF

6,041

5,885

B.

Monetary Authority

695

639

 1.

Short-term

695

639

 

(i) Currency and Deposits

695

639

C.

Non-Government (1+2)

194,492

203528

1

Short-Term {(i)+(ii)}

50,257

55,654

 

(i) Money Market Instruments

2,642

2,460

 

(ii) Trade Credit

47,615

53,194

2

Long-term {(i)+(ii)+(iii)+(iv)}

144,235

147874

 

(i) Bonds and Notes

22,356

22,314

 

(ii) Loans

73,338

76,830

 

(iii) Currency and Deposits

47,890

48,108

 

(iv) Trade Credits

651

622

 

Total External Debt (A+B+C)

262,253

273078

Source: Ministry of Finance, Government of India and Reserve Bank of India.

6. Short-Term Debt by Original and Residual Maturity

(i) Based on original maturity, the share of short-term debt stood at 21.2 per cent in the stock of total external debt as at end-June 2010 (Table 6).

(ii) 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.

Table 6 : Short-Term Debt by Original Maturity

(US $ million)

 

End-March

End-June

 

2008

2009

2010

2009

2010

1

2

3

4

5

6

A

Short-Term Debt

45,738

43,362

52,471

42,029

57,841

 

a) NRI Deposits (up to 1 year maturity) @

-

-

-

-

-

 

b) FC (B&O) Deposits (up to 1 year maturity)

-

-

-

-

-

 

c) Trade Related Credits

41,901

39,964

47,615

38,501

53,194

 

     (i) Above 6 months and up to 1year

22,884

23,346

28,002

23,882

32,075

 

    (ii) Up to 6 months

19,017

16,618

19,613

14,619

21,119

 

d) FII Investments in Government Treasury Bills & other instruments

651

2,065

3,357

2149

3,238

 

e) Investment in Treasury Bills by foreign central banks and international institutions etc.

155

105

103

104

84

 

f) External Debt Liabilities of:

3,031

1,228

1,396

1,275

1,325

 

    (i) Central Bank

1,115

764

695

769

639

 

   (ii) Commercial Bank

1,916

464

701

506

686

B

Imports   (during the year)*

257,789

294,587

299,491

64,799

87,920

C

Trade Credits to Imports (%)

16.7

15.6

15.9 

-

-

@: Short-term deposits of less than one-year maturity under FCNR(A) were withdrawn with effect from May 15, 1993, such deposits under FCNR(B) and NR(E)RA were withdrawn effective October 1999 and April 2003, respectively.

*: On balance of payment basis.

Source: Ministry of Finance, Government of India and Reserve Bank of India.

(iii) Based on residual maturity, the short-term debt accounted for 42.5 per cent of total external debt as at end-June 2010. The ratio of short-term debt by residual maturity to foreign exchange reserves worked out to 42.1 per cent at end-June 2010 (Table 7).

Table 7: Residual Maturity of External Debt Outstanding as at End-June 2010

(US $ million)

 

Short-term

Long-term

Total

Components

Up to one year

1 to 2 years

2 to 3 years

More than 3 years

(2) to (5)

1

2

3

4

5

6

1. Sovereign Debt (long-term)

4,195

4,400

4,686

54,081

67,362

2. External Commercial Borrowings (including trade credit)

15,841

15,836

15,542

52,549

99,767

3. NRI deposits {(i)+(ii)+(iii)}

38,085

5,752

2,959

1,312

48,108

  (i) FCNR(B)

11,035

1,854

1,078

402

14,369

  (ii) NR(E)RA

21,349

2,633

1,590

495.273

26,067

(iii) NRO

5,700

1265.88

291.536

414.288

7,672

4. Short-term Debt* (Original maturity)

57,841

0

0

0

57,841

 Total (1 to 4)

115,962

25,988

23,187

107,941

273,078

Memo Items

 

 

 

 

 

Short-term debt  (Residual maturity as per cent of total debt)

42.5

 

 

 

 

Short-term debt (Residual maturity as per cent of Reserves)

42.1

 

 

 

 

* Also includes short-term component of sovereign debt amounting to US$ 1548 million.

Note: Residual Maturity of NRI Deposits is estimated on the basis of the Survey conducted by the
Reserve Bank on NRI deposits outstanding as on June 30, 2010.

Source: Ministry of Finance, Government of India and Reserve Bank of India.

7. Government and Non-Government External Debt

(i) Government (Sovereign) external debt stood at US$ 68.9 billion as at end-June 2010 as against US$ 67.1 billion as at end-March 2010. The shares of Government and non-Government external debt in the total external debt were 25.2 per cent and 74.8 per cent, respectively, as at end-June 2010 (Table 8).

Table 8: Government and Non-Government External Debt

(US $ million)

Sr. No.

Components

End-March

End-June

2008

2009

2010

2010

1

2

3

4

5

6

A.

Sovereign Debt (I+II)

58,068

54,795

67,065

68911

 

(As a percentage of GDP)

4.7

5.0

4.8

 

I.

External Debt on Government Account under External Assistance

52,538

51755

55232

57050

II.

Other Government External Debt @

5,530

3040

11833

11860

B.

Non-Government Debt #

166,339

169720

195188

204167

 

(As a percentage of GDP)

13.4

15.5

14.1

 

C.

Total External Debt (A+B)

224,407

224,515

262,252

273078

 

(As a percentage of GDP)

18.1

20.5

18.9

 

@: Other Government external debt includes defence debt, investment in Treasury Bills/ Government securities by FIIs, foreign central banks and international institutions.

#: Includes external debt of Monetary Authority.

Source: Ministry of Finance, Government of India and Reserve Bank of India

8. Select Indicators of External Debt

(i) India’s foreign exchange reserves provided a cover of 101.0 per cent to the external debt stock at the end of June 2010 as compared to 106.4 per cent as at end-March 2010.

(ii) The share of concessional debt in total external debt continued to decline and stood at 15.9 per cent as at end-June 2010 as compared to 16.7 per cent at end-March 2010.

(iii) The ratio of short-term debt to foreign exchange reserves at 21.0 per cent as at end-June 2010 was higher than that of 18.8 per cent as at end March 2010.

(iv) The share of short-term debt in total debt increased marginally to 21.2 per cent at end-June 2010 (Table 9).

Table 9: India’s Key External Debt Indicators

Year

External Debt

Ratio of External Debt to GDP

Debt Service Ratio

Ratio of Foreign Exchange Reserves to Total Debt

Ratio of Concessional Debt to Total Debt

Ratio of Short-Term Debt to Foreign Exchange Reserves

Ratio of Short- Term Debt to Total Debt

(US $ billion)

(per cent)

(per cent)

(per cent)

(per cent)

(per cent)

(per cent)

1

2

3

4

5

6

7

8

1990-91

83.8

28.7

35.3

7.0

45.9

146.5

10.2

1995-96

93.7

27.0

26.2

23.1

44.7

23.2

5.4

2000-01

101.3

22.5

16.6

41.7

35.4

8.6

3.6

2001-02

98.8

21.1

13.7

54.7

35.9

5.1

2.8

2002-03

104.9

20.3

16.0*

72.5

36.8

6.1

4.5

2003-04

111.6

18.0

16.1**

101.2

35.8

3.9

4.0

2004-05

134.0

18.1

5.9^

106.4

30.7

12.5

13.3

2005-06

139.1

16.7

10.1#

109.0

28.4

12.9

14.1

2006-07

172.4

17.5

4.7

115.6

23.0

14.1

16.3

2007-08

224.4

18.1

4.7

138.0

19.7

14.8

20.4

2008-09

224.5

20.5

4.4

112.2

18.7

17.2

19.3

2009-10PR

262.3

18.9

5.5

106.4

16.7

18.8

20.0

end-June 10P

273.1

 

 

101.0

15.9

21.0

21.2

P: Provisional; PR : Partially Revised.

* Works out to 12.4 per cent, with the exclusion of prepayment of external debt of US $ 3,430 million.

** Works out to 8.2 per cent with the exclusion of pre payment of external debt of US $ 3,797 million and redemption of Resurgent India Bonds (RIBs) of US $ 5,549 million.

^ works out to 5.7 per cent with the exclusion of pre payment of external debt of US $ 381 million.

# works out to 6.3 per cent with the exclusion of India Millennium Deposits (IMDs) repayments of US $ 7.1 billion and pre payment of external debt of US $ 23.5 million.

Source: Ministry of Finance, Government of India and Reserve Bank of India.

Ajit Prasad
Assistant General Manager

Press Release : 2010-2011/452

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