India’s external debt increased by USD 14.1 billion to USD 557.4 billion at the end of June quarter. External debt is expected to increase further from USD 557.40 Billion in second quarter.
The figure excludes valuation losses due the devaluation of US dollar against the rupee and other currencies. The valuation loss was USD 1.7 billion.
Commercial Borrowing
Commercial borrowing had a share of 38% in the external debt.
The repayments of commercial borrowing have lowered in the first quarter of this financial year. The debt service decreased to 5.8% of current receipts at end June as compared to 6.4% at end-March 2019.
Short term and Long-Term Debt
According to data published by RBI, Long-term debts increased to USD 447.7 billion at end-June 2019. Long term debt was at USD 434.9 billion on 31st March 2019.
Short-term debt contributed 19.7% in the total external debt at June end. It had a share of 20% on 31st March 2019.
The ratio of short-term debt to foreign exchange reserves decreased to 25.5% in June ending from that of 26.3 % at end-March quarter in 2019.
The short-term trade credit had a share of 18.7% in the total external debt.
However, the short-term debt on residual maturity basis marginally declined to 43.2% on June 2019 compared to 43.3% on March 2019. It had a share of 56% in the foreign exchange reserves in which was 57% at end-March 2019. Residual maturity includes debt obligations like long-term debt.
Currency Denominated Debt
US dollar-denominated debt had the largest share of 51.1% in total external debt of the country. Indian Rupee had share of 34.7 %, Yen 5.1%, SDR 4.7% and the euro 3.2%.
The non-residential (NRI) deposit stood had a share of 18.7 % in the total external debt.
Analysis suggests that loans were the largest component of external debt, with a share of 34.9 per cent, currency and deposits had a share of 24.5 per cent, trade credit and advances 19.2 per cent and debt securities 17.1 per cent in the total external debt.
According to borrower-wise classification, the outstanding debt of both government and non-government sectors increased in end-June 2019. As the government resources are stressed lately, the debt is likely to increase. Since the rupee remained strong against the US dollar in first fiscal of this financial year, it may bring valuation losses in the external debt.