India’s external debt rises 8.2% to $620.7 billion through March 2022 (FinMin report)



India’s external debt rose 8.2% year-on-year to $620.7 billion in March 2022, which the finance ministry says is sustainable.

While 53.2% of it was denominated in US dollars, Indian rupee-denominated debt, estimated at 31.2%, was the second largest, according to the State of External Debt report. India published by the ministry.

“India’s external debt continues to be sustainable and prudently managed. At the end of March 2022, it stood at $620.7 billion, up 8.2% from its level. a year ago. External debt as a percentage of GDP was 19.9%, while the reserve-to-external debt ratio was 97.8%,” he said.

Foreign exchange reserves as a percentage of external debt were slightly lower at 97.8% at the end of March 2022 against 100.6% a year ago.

The report said long-term debt estimated at $499.1 billion constituted the largest share of 80.4 percent, while short-term debt of $121.7 billion accounted for 19.6 percent of the total.

Short-term trade credit was mainly in the form of trade credit (96 percent) financing imports.

Sovereign debt at $130.7 billion was up 17.1% from its level a year ago, mainly due to the additional allocation of Special Drawing Rights (SDRs) by the Monetary Fund (IMF) in 2021-22.

Non-sovereign debt, on the other hand, rose 6.1% to $490.0 billion from the end-March 2021 level, he said, adding that commercial borrowing, NRI deposits and the Short-term commercial credit are the three main constituents of non-sovereign debt, accounting for up to 95.2%.

While NRI deposits decreased by 2% to $139.0 billion, commercial borrowings at $209.71 billion and short-term commercial credits at $117.4 billion increased by 5.7% and 20.5%, respectively, he said.

Observing that debt vulnerability indicators remained benign, the report said the debt service ratio fell significantly to 5.2% in 2021-22 from 8.2% the previous year, reflecting dynamic current receipts and moderation in external debt service payments.

Debt service payment obligations arising from outstanding external debt at end-March 2022 are expected to decline over the next few years, he said, adding that from an international perspective, external debt of India is modest.

In terms of various debt vulnerability indicators, India’s sustainability was better than that of low- and middle-income countries (LMICs) as a group and vis-à-vis many of them individually, did he declare.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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