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India’s External Debt as at the end of June 2012

The current account deficit was largely financed through debt flows with continued uncertainty in the global economy affecting the quantum of equity flows during the first quarter of 2012-13. However, the magnitude of increase in external debt was lower than that of the preceding quarter largely due to valuation gains resulting from appreciation of US dollar against Indian rupee and other international currencies.

The major developments relating to India’s external debt as at end-June 2012 are set out below:

  1. India’s external debt, as at end-June 2012, was placed at US$ 349.5 billion showing an increase of US$ 3.9 billion or 1.1 per cent over the level at end-March 2012. The increase in total external debt during the quarter was primarily on account of rise in Non-resident external rupee denominated ((NR(E) RA) deposits, reflecting the impact of deregulation of interest rates in these deposits in December 2011. There has been sizeable rise in short-term trade credit as well.  

  2. Excluding the valuation gains due to the appreciation of the US dollar against Indian rupee and other international currencies, the external debt as at end-June would have increased by US $ 11.8 billion over end-March 2012.

  3. In terms of major components, the share of external commercial borrowings (ECB) continued to be the highest at 30.0 per cent of total external debt, followed by NRI deposits (17.4 per cent) and multilateral debt (14.2 per cent).

  4. Based on residual maturity, short-term debt accounted for 42.9 per cent of the total external debt as at end-June 2012. Of this, the share of NRI deposits was 28.8 per cent. The share of short-term debt in total debt, by original maturity, was 23.0 per cent.

  5. The ratio of short-term debt (original maturity) to foreign exchange reserves rose to 27.8 per cent as at end-June 2012 from 26.6 per cent as at end-March 2012.

  6. The debt denominated in US dollar continued to be the highest with a share of 56.3 per cent in total external debt as at end-June 2012 followed by the Indian rupee (21.4 per cent) and Japanese Yen (9.1 per cent).

  7. The ratio of foreign exchange reserves to external debt as at end June 2012 at 82.9 per cent was lower than the level of end-March 2012.

1. India’s External Debt as at end-June 2012

India’s external debt, as at end-June 2012, was placed at US$ 349.5 billion showing an increase of US$ 3.9 billion or 1.1 per cent over the end-March 2012 level primarily on account of Non-resident external rupee ((NR(E) RA) denominated deposits and short-term trade credits (Table 1). Significantly, the stock of multilateral debt and ECB at the end of June 2012 was lower than that of the level at end of March 2012. The decline in the stock of ECB was mainly due to higher repayments during the quarter.

Table 1: External Debt – Outstanding and Variation

(US$ million)

Item

Outstanding at the end-of

Absolute variation

Percentage Variation

Jun-11

Mar 2012 PR

Jun 2012 P

Jun-12 over Jun-11

Jun-12 over Mar-12

Jun-12 over Jun-11

Jun-12 over Mar-12

1

2

3

4

5

6

7

8

1. Multilateral

49,375

50,453

49,780

406

-673

0.8

-1.3

2. Bilateral

26,168

26,714

27,248

1,081

534

4.1

2.0

3. IMF

6367

6163

6037

-330

-126

-5.2

-2.0

4. Trade Credit

18,692

18,980

19,094

402

114

2.2

0.6

5. External Commercial Borrowings

92,675

105,210

104,841

12,166

-369

13.1

-0.4

6. NRI Deposits

52,898

58,608

60,874

7,976

2,266

15.1

3.9

7. Rupee Debt

1,568

1,354

1,219

-349

-135

-22.3

-10.0

8. Short-Term Debt

68,474

78,179

80,450

11,976

2,271

17.5

2.9

Of which:

(i) Short-Term Trade Credit

61,532

65,130

70,508

8,976

5,378

14.6

8.3

Total Debt (1 to 8)

316,216

345,661

349,543

33,327

3,882

10.5

1.1

Memo Items

A. Long-Term Debt (1 to 7)

247,742

267,482

269,093

21,351

1,611

8.6

0.6

B. Short-Term Debt

68,474

78,179

80,450

11,976

2,271

17.5

2.9

P: Provisional;    PR : Partially Revised.

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

The share of short-term debt in total debt rose over the preceding as well as corresponding quarter of the previous year. The long-term debt at US$ 269.1 billion and short-term debt at US$ 80.5 billion accounted for 77.0 per cent and 23.0 per cent, respectively, of the total external debt as at end-June 2012 (Table 2). Although, widening CAD was largely financed through debt flows, rise in magnitude of debt over the preceding quarter has been relatively moderate as a part of the rise was offset by valuation gains.

Table 2 : External Debt by Component

(US $ million)

Item

End- March

End-June

2010

2011

2012PR

2011 PR

2012 P

1

2

3

4

5

6

1. Multilateral

42,857

48,474

50,453

49,375

49,780

 

(16.4)

(15.8)

(14.6)

(15.6)

(14.2)

2. Bilateral

22,593

25,698

26,714

26,168

27,248

 

(8.7)

(8.4)

(7.7)

(8.3)

(7.8)

3. IMF

6,041.0

6,308

6163

6367

6037

 

(2.3)

(2.1)

(1.8)

(2.0)

(1.7)

4. Trade Credit

16,841

18,613

18,980

18,692

19,094

 

(6.5)

(6.1)

(5.5)

(5.9)

(5.5)

5. ECBs

70,726

88,565

105,210

92,675

104,841

 

(27.1)

(28.9)

(30.4)

(29.3)

(30.0)

6. NRI Deposits

47,890

51,682

58,608

52,898

60,874

 

(18.4)

(16.9)

(17.0)

(16.7)

(17.4)

7. Rupee Debt

1,658

1,601

1,354

1,567

1,219

 

(0.6)

(0.5)

(0.4)

(0.5)

(0.3)

8. Long-term Debt (1 to 7)

208,606

240,941

267,482

247,742

269,093

 

(79.9)

(78.8)

(77.4)

(78.3)

(77.0)

9. Short-term Debt

52,329

64,990

78,179

68,474

80,450

 

(20.1)

(21.2)

(22.6)

(21.7)

(23.0)

Total (8+9)

260,935

305,931

345,661

316,216

349,543

 

(100.0)

(100.0)

(100.0)

(100.0)

(100.0)

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

The valuation gain during the first quarter of 2012-13 amounted to US$ 7.9 billion reflecting the appreciation of US dollar against the Indian rupee and other major currencies. Thus excluding the valuation gains the stock of external debt as at end-June 2012 would have increased by 11.8 billion.

3. Currency Composition of India’s External Debt

The US Dollar denominated debt continued to be the largest with a share of 56.3 per cent in the total external debt as at end-June 2012 followed by Indian rupee (21.4 per cent), Japanese yen (9.1 per cent), SDR (8.3 per cent) and Euro (3.3 per cent)

4. External Debt by Residual Maturity

Based on residual maturity, the short-term debt accounted for 42.9 per cent of total external debt as at end-June 2012. Within the short-term debt, the share of NRI deposits was the highest at 28.8 per cent. The ratio of short-term debt by residual maturity to foreign exchange reserves worked out to 51.8 per cent at end-June 2012 (Table 3).

Table 3: Residual Maturity of External Debt Outstanding as at End-June 2012

(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) $

4,433

4,620

4,835

60,846

74,735

2. External Commercial Borrowings #

21,804

15,877

19,430

76,372

133,484

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

43,327

5,595

4,548

7,404

60,874

(i) FCNR(B)

11,660

1,313

799

500

14,272

(ii) NR(E)RA

23,621

3,069

3,104

5,887

35,681

(iii) NRO

8,046

1,213

645

1,017

10,921

4. Short-term Debt* (Original maturity)

80,450

0

0

0

80,450

Total (1 to 4)

150,014

26,093

28,813

144,622

349,542

Memo Items

 

 

 

 

 

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

42.9

 

 

 

 

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

51.8

 

 

 

 

$: Inclusive of FII investment in Government securities amounting to US $ 5,047 million.
#: External Commercial Borrowings are inclusive of trade credit and a portion of non-Government multilateral and bilateral borrowing and therefore may not tally with the ECB provided in other Tables under original maturity.
* Also includes short-term component of sovereign debt amounting to US$ 5,362 million.
Note: Residual Maturity of NRI Deposits is estimated on the basis of returns submitted by authorised dealers.
Source: Ministry of Finance, Government of India and Reserve Bank of India.

5. Government and Non-Government External Debt

Government (Sovereign) external debt stood at US$ 80.1 billion as at end-June 2012 as against US$ 81.9 billion as at end-March 2012. The shares of Government and non-Government external debt in the total external debt were 23.0 per cent and 77.0 per cent, respectively, as at end-June 2012 (Table 4).

Table 4: Government and Non-Government External Debt

(US$ million)

Sr. No.

Components

End- March

End June

2010

2011

2012

2012

1

2

3

4

5

6

A.

Sovereign Debt (I+II)

67,067

78,071

81,895

80,152

 

(As a percentage of GDP)

4.6

4.7

4.7

-

I.

External Debt on Government Account under External Assistance

55,235

62,295

63,374

62,750

II.

Other Government External Debt @

11,845

15,776

18,521

17,402

B.

Non-Government Debt #

193,868

227,859

263,766

269,390

 

(As a percentage of GDP)

13.6

13.2

15.3

 

C.

Total External Debt (A+B)

260,935

305,931

345,661

349,543

 

(As a percentage of GDP)

18.3

17.8

20.0

-

@ 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.

6. Select Indicators of External Debt

Among the indicators of external debt considered for assessing vulnerability, almost all the indicators showed some deterioration as at end-June 2012 as compared to end-March 2012. Debt service ratio, however, showed a tad better during the first quarter 2012-13 than 2011-12 (Table 5).

Table 5: India’s Key External Debt Indicators

(Per cent)

Year

External Debt
(US $ billion)

Ratio of External Debt to GDP

Debt Service Ratio

Ratio of Foreign Exchange Reserves to Total Debt

Ratio of Concessi-onal Debt to Total Debt

Ratio of Short-Term Debt to Foreign Exchange Reserves

Ratio of Short- Term Debt to Total Debt

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

112.6

18.0

16.1**

100.3

35.8

3.9

3.9

2004-05

134.0

18.1

5.9 ^

105.6

30.7

12.5

13.2

2005-06

139.1

16.8

10.1 #

109.0

28.4

12.9

14.0

2006-07

172.4

17.5

4.7

115.6

23.0

14.1

16.3

2007-08

224.4

18.0

4.8

138.0

19.7

14.8

20.4

2008-09

224.5

20.3

4.4

112.1

18.7

17.2

19.3

2009-10PR

260.9

18.3

5.8

106.8

16.8

18.8

20.0

2010-11PR

305.9

17.8

4.3

99.6

15.5

21.3

21.2

2011-12PR

345.7

20.0

6.0

85.1

13.8

26.6

22.6

End-June 2012P

349.5

-

5.9 

82.9

13.5

27.8

23

P: Provisional; PR: Partially Revised.

* Works out to 12.4 per cent, with the exclusion of pre-payment 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.

The data on external debt outstanding as at end-June 2012, along with revised data for the earlier quarters are set out in Statement 1 and 2.

Ajit Prasad
Assistant General Manager

Press Release : 2012-2013/535

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