India’s external debt rose marginally by $5.6 billion to $624.7 billion annually at the end of March 2023, although the debt-GDP ratio declined, the Reserve Bank said in a release on Friday. In the same period last year, the external debt stood at $619.1 billion. However, the ratio of external debt to the country’s Gross Domestic Product (GDP) decreased from 20.0 per cent in March 2022 to 18.9 per cent in March 2023.
The RBI also said that valuation gains due to the appreciation of the US dollar compared to the Indian rupee and major currencies such as Yen, SDR, and Euro were placed at $20.6 billion.
“Excluding the valuation effect, external debt would have increased by $26.2 billion instead of $5.6 billion at end-March 2023 over end-March 2022,” the central bank added.
As per the RBI, at the end of March 2023, long-term debt (with an original maturity of over one year) stood at $496.3 billion, showing a decrease of $1.1 billion compared to the previous year. The proportion of short-term debt (with an original maturity of up to one year) in the total external debt, however, rose to 20.6 per cent by the end of March 2023, up from 19.7 per cent in March 2022.
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Similarly, the ratio of short-term debt (original maturity) to foreign exchange reserves increased to 22.2 per cent by the end of March 2023 (compared to 20 per cent in March 2022).
The RBI also noted that the largest component of India’s external debt was in US dollars, accounting for 54.6 per cent at the end of March 2023, followed by debt denominated in Indian rupees (29.8 per cent), Special Drawing Rights (SDR) (6.1 per cent), yen (5.7 per cent), and the euro (3.2 per cent).
Loans constituted the largest portion of external debt, representing 32.5 per cent of the total, followed by currency and deposits (22.6 per cent), trade credit and advances (19.9 per cent), and debt securities.
According to the RBI, debt service (including principal repayments and interest payments) slightly increased to 5.3 per cent of current receipts by the end of March 2023, compared to 5.2 per cent in March 2022, indicating higher debt service obligations.