India's debt-GDP ratio dips to 18.7 per cent in March 2024
Mumbai: India's external debt to GDP ratio declined to 18.7 per cent at end-March 2024 from 19.0 per cent at end-March 2023, reflecting a strengthening of the country's macroeconomic fundamentals.
Although in absolute terms at the end-March 2024, India's external debt stood at $663.8 billion, an increase of $39.7 billion over its level at end-March 2023 there was also an increase in the country's GDP due to the high economic growth. This resulted in a decline in the debt to GDP ratio.
The RBI data also shows:
* Valuation effect due to the appreciation of the US dollar vis-a-vis the Indian rupee and other major currencies such as yen, the euro and SDR amounted to $8.7 billion.
Excluding the valuation effect, external debt would have increased by $48.4 billion instead of $39.7 billion at end-March 2024 over end-March 2023.
* At end-March 2024, long-term debt (with original maturity of above one year) was placed at $541.2 billion, recording an increase of $45.6 billion over its level at end-March 2023.
* The share of short-term debt (with original maturity of up to one year) in total external debt declined to 18.5 per cent at end-March 2024 from 20.6 per cent at end-March 2023.
Similarly, the ratio of short-term debt (original maturity) to foreign exchange reserves declined to 19 per cent at end-March 2024 (22.2 per cent at end-March 2023).
* Short-term debt on residual maturity basis constituted 42.9 per cent of total external debt at end-March 2024 (44.0 per cent at end-March 2023) and stood at 44.1 per cent of foreign exchange reserves (47.4 per cent at end-March 2023).
* US dollar-denominated debt remained the largest component of India's external debt, with a share of 53.8 per cent at end-March 2024, followed by debt denominated in the Indian rupee (31.5 per cent), yen (5.8 per cent), SDR (5.4 per cent), and euro (2.8 per cent).
* Outstanding debt of both government and non-government sectors increased at end-March 2024 over the level a year ago.
* The share of outstanding debt of non-financial corporations in total external debt was the highest at 37.4 per cent
* Loans remained the largest component of external debt, with a share of 33.4 per cent, followed by currency and deposits (23.3 per cent), trade credit and advances (17.9 per cent) and debt securities (17.3 per cent).
* Debt service (i.e., principal repayments and interest payments) increased to 6.7 per cent of current receipts at end-March 2024 from 5.3 per cent at end-March 2023, reflecting higher debt service.