India’s external debt remains stable; declines to 18.9% of GDP from 20% last year: Finance Ministry
India’s external debt declined to 18.9 per cent of GDP at the end of March 2023 from 20 per cent last year, revealed the Finance Ministry's annual status report that was published on Wednesday.
However, the external debt of India rose marginally by 0.9 per cent as the external debt stood at $624.7 billion at the end of March 2023 as compared to $619.1 billon last year.
The last status report by the ministry published in 2022 showed that India’s external debt grew by 8.2 per cent in March 2022 when compared to March 2021.
Finance Ministry in its report has attributed the 'rise in loans from short-term trade creditors (5.6 per cent), and bilateral (6.3 per cent) and multilateral (2.7 per cent) loans' as major factors for the marginal increase in external debt during the period under review.
«As of end-March 2023, all the macroeconomic indicators of external debt remained sustainable. Commercial borrowings remained the largest component of external debt,» said the ministry's report on external debt.
Commercial borrowings, Non-Resident Indian (NRI) deposits, short-term trade credits and multilateral loans together accounted for 89.6 per cent of the total external debt of India.
Commercial borrowings and NRI deposits declined by 1.7 per cent and 0.1 per cent, respectively.
Long-term debt which forms the major chunk of India's external debt reduced by 0.2 per cent at the end of March 2023 while short-term debt, constituting 20.6 per cent of the total debt, rose by 5.5 per cent mainly due to 5.6 per cent increase in the short term trade credit.
The valuation effect of US dollar and other major currencies also plays an important role on the external debt of the country.
