India’s external debt down 1.1% at $479.7 bn in July-August 2016

India's external debt at $479.7 billion as of end-June 2016, showing a decline of $5.4 billion, or 1.1 per cent, over its level at end-March 2016, primarily on account of a decline in commercial borrowings, official data released on Friday showed.

The decline in the level of external debt was partly offset by valuation gains resulting from the appreciation of the US dollar vis-a-vis the Indian rupee and other major currencies, the release added.

The external debt to GDP ratio stood at 23.4 per cent at end-June 2016, a shade lower than its level of 23.7 per cent at end-March 2016, figures released by the Reserve bank of India (RBI) showed.

Valuation gains due to appreciation of the US dollar against the Indian rupee and other major currencies was placed at $1.4 billion. Excluding the valuation effect, the decline in external debt would have been $4.0 billion instead of $5.4 billion as at end-June 2016 over the level at end-March 2016.

Commercial borrowings continued to be the largest component of external debt with a share of 36.6 per cent, followed by NRI deposits (26.3 per cent) and short-term trade credit (16.6 per cent).

At end-June 2016, long-term debt stood at $397.6 billion, recording a decline of $4.1 billion over its level at end-March 2016. The share of long-term debt in total external debt was marginally higher at 82.9 per cent as of end-June 2016 compared to its level at end-March 2016.
 
The share of short-term debt in total debt witnessed a marginal decline over its level at end-March 2016. The ratio of short-term debt to foreign exchange reserves declined to 22.6 per cent as of end-June 2016 (23.1 per cent at end-March 2016).

On a residual maturity basis, short-term debt constituted 42.4 per cent of total external debt at end-June 2016 (42.6 per cent at end-March 2016) and stood at 55.9 per cent of total foreign exchange reserves (57.4 per cent at end-March 2016).

US dollar denominated debt continued to be the largest component of India's external debt with a share of 57.1 per cent as at end-June 2016, followed by the Indian rupee (28.6 per cent), SDR (5.9 per cent), Japanese yen (4.8 per cent) and Euro (2.4 per cent).

While the outstanding debt of the government increased, non-government debt declined at end-June 2016.

Debt service payments declined to 7.5 per cent of current receipts as of end-June 2016 against 8.8 per cent at end-March 2016, as per the RBI release.