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Government released the Eleventh Status Report on India’s External Debt, here today giving a detailed analysis of the developments in India’s external debt during the last year and covers data from March, 1991 to December, 2004. The Report also compares India’s external debt situation with other countries.
India’s external debt was US$120.9 billion as at the end of December, 2004 against US$112.8 billion at end-December 2003. During this period, the external debt stock in US dollar terms rose by US$ 8.1 billion, of which US$3.1 billion or 38 per cent was contributed by valuation effects arising from depreciation of the US dollar. Significantly, between December 2002 and December 2004, India’s external debt rose by US$15.5 billion, of which US$8.7 billion or 56 per cent was on account of weakening of the US dollar. During the same period, the sovereign debt rose by US$879 million. If the US dollar had not depreciated, sovereign debt would have actually declined by as much as US$3.9 billion during this period.
External debt indicators continued to show improvement over the years though the magnitude of debt has increased. For instance, the external debt-to-GDP ratio has gradually declined over the years to 17.8 per cent in 2003-04 and debt service payments as a proportion of gross current receipts (debt-service ratio) dropped to 16.2 percent in 2003-2004 and further to 6.1 percent during April-December,2004. Similarly, ratios of short-term debt to total debt and short-term debt to forex assets too have improved over the years. India’s ability to service external debt has substantially enhanced consequent on the improvement in the ratios of total debt service payments and interest payments to current receipts. The debt accumulation was moderate and debt sustainability indicators have improved progressively in the recent past mirroring essentially the sustained efforts of the Government to keep external debt within manageable limit.
In terms of international comparison, India’s external debt indicators such as short-term debt to total debt and short-term debt to forex reserve ratio are the lowest among the top ten debtor countries. Proportion of concessional loans in total debt is the highest for India, while debt to Gross National Income ratio is the second lowest after China in the year 2003. World Bank upgraded India from moderately indebted to less indebted country in 1999. Among the top ten debtor countries of the world, India improved its rank from third debtor after Brazil and Mexico in 1991 to eighth in 2003.
The Department of Economic Affairs, Ministry of Finance has been bringing out the Status Report on India’s External Debt since 1993. The complete Report is available on Ministry of Finance Website-http://www.finmin.nic.in
BSC/BY/GN-241/05
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