India’s debt externally rises in March
According to Reserve Bank of India data issued on Wednesday, India’s external debt increased by $11.5 billion years on year to $570 billion at the end of March 2021. The external debt-to-GDP ratio increased to 21.1% at the end of March 2021, up from 20.6% the previous year.
The devaluation of the US dollar NSE 0.85% against the Indian rupee and key currencies such as the euro, SDR, and the pound has resulted in a loss of value.
The RBI stated that without the valuation effect, the rise in external debt at end-March 2021 over end-March 2020 would have been $4.7 billion instead of $11.5 billion.
Some key takeaways are:
- Commercial borrowings remained the largest component of external debt, with a share of 37.4%, followed by non-resident deposits (24.9%) and short-term trade credit (17.1%).
- US dollar-denominated debt remained the largest component of India’s external debt, with a share of 52.1% as of March-end 2021, followed by the Indian rupee (33.3%), yen (5.8%), SDR (4.4%) and the euro (3.5%).
- The borrower-wise classification shows that the outstanding debt of both government and non-government sectors increased by March 2021.
- The instrument-wise classification shows that the loans were the largest component of external debt, with a share of 34.8%, followed by currency and deposits (25.2%), trade credit and advances (17.6%) and debt securities (17%).