At end-March 2024, India’s external debt was placed at $ 663.8 billion, an increase of $ 39.7 billion over its level at end-March 2023 according to a release by the Reserve Bank of India.
The valuation impact helped contain India’s external debt by one percentage point. Valuation effect due to the appreciation of the dollar vis-à-vis the 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, the central bank release said.
Notably, the share of vulnerable short terms debt has also declined. The share of short-term debt with original maturity of up to one year declined to 18.5 per cent at end-March 2024 from 20.6 per cent at end-March 2023. While short-term debt on residual maturity basis which is debt obligations that include long-term debt by original maturity falling due over the next twelve months and short-term debt by original maturity constituted 42.9 per cent of total external debt at end-March 2024 from 44.0 per cent at end-March 2023.
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.
INSET
During 2023-24, the net claims of non-residents declined by $ 5.5 billion on the back of higher rise in India’s external financial assets at $ 109.8 billion vis-à-vis external financial liabilities at $ 104.3 billion according to the latest data on India’s international investment position released by the Reserve Bank of India.
Reserve assets accounted for 62 per cent of the increase in total overseas financial assets of residents: currency and deposits, and overseas direct investments were other major components.
Inward portfolio and direct investments as well as loans accounted for over three-fourths of the rise in foreign liabilities during the year.
The ratio of India’s international financial assets to international financial liabilities increased to 74.0 per cent in March 2024 from 71.4 per cent a year ago
Content Source: economictimes.indiatimes.com