India’s external debt has reached $663.8 billion as of March 2024, marking an increase of $39.7 billion from the previous year. Despite the rise in external debt, the debt-to-GDP ratio has actually decreased, standing at 18.7% at the end of March 2024 compared to 19.0% in March 2023.
The Reserve Bank of India (RBI) released data on Tuesday indicating that the valuation effect, attributed to the appreciation of the U.S. dollar against major currencies like the Indian rupee, yen, euro, and SDR, amounted to $8.7 billion. Excluding this effect, the external debt would have seen a larger increase of $48.4 billion.
Long-term debt, with an original maturity of over one year, amounted to $541.2 billion at the end of March 2024, marking a significant increase of $45.6 billion from the previous year. Short-term debt, on the other hand, saw a decline in its share in total external debt, indicating a positive trend.
The composition of India’s external debt reveals that U.S. dollar-denominated debt remains the largest component at 53.8%, followed by debt denominated in Indian rupee, yen, SDR, and euro. Loans continue to be the primary component of external debt, accounting for 33.4% of the total, followed by currency and deposits, trade credit and advances, and debt securities.
The increase in external debt has implications for debt service, including principal repayments and interest payments, which saw a rise to 6.7% of current receipts at the end of March 2024. This reflects higher debt service obligations for the country.
Overall, the data released by the RBI provides valuable insights into India’s external debt trends and highlights the importance of monitoring and managing the country’s debt levels to ensure sustainable economic growth.
