India’s external debt increased by $13.3 bn to $682.3 bn in April-June 2024: RBI data

India’s external debt increased by $13.3 billion and stood at $682.3 billion as of end-June 2024 against $589 billion at end-March, data released by the Reserve Bank of India (RBI) showed.

The ratio of external debt to the country’s GDP, however, declined slightly to 18.8 per cent at end-June 2024 compared with 18.9 per cent at end-March 2024.

RBI noted that there was a $3 billion increase in the exchange value of the dollar versus the rupee as the US currency appreciated against the Indian currency and other major currencies such as yen, the euro and the IMF currency, the SDR, during the quarter ended 30 June 2024.

But for the valuation effect, the country’s external debt would have increased to $16.3 billion at end-June 2024, says the RBI release..

Long-term debt, ie debt that has a maturity of above one year, stood at $549.6 billion as of end-June 2024, showing an increase of 1.5 per cent ($8.2 billion) during the April-June 2024 quarter.

Short-term debt or debt having maturity less than a year, accounted for 19.4 per cent of the country’s total debt at end-June 2024 against 19.1 per cent at end-March 2024. The ratio of short-term debt to foreign exchange reserves increased to 20.3 per cent at end-June 2024 from 19.7 per cent at end-March 2024.

Total debt obligations (both short-term and long term) due for repayment within a year comprised 44 per cent of total external debt at end-June 2024, up from 43.4 per cent at end-March 2024. This also account for 46 per cent of foreign exchange reserves, up from 44.9 per cent at end-March 2024.

Dollar-denominated debt had a 54 per cent share of India’s total external debt at end-June 2024, followed by 31.2 per cent share of the rupee-denominated debt, while the share of yen-denominated debt had a 5.1 per cent share, SDR-denominated debt had a 5.1 per cent share and euro-denominated debt a 2.9 per cent share.

While outstanding debt of both government and non-government sectors increased, the share of outstanding debt of non-financial corporations in total external debt was the highest at 37.4 per cent, followed by deposit-taking corporations (28.4 per cent), general government (21.9 per cent) and other financial corporations (7.5 per cent).

Loans continued to be the largest component of the country’s external debt, with a share of 33.0 per cent, followed by currency and deposits (23.5 per cent), trade credit and advances (18.6 per cent) and debt securities (17.1 per cent).

The share of debt servicing, ie, repayment of principal and interest, was slightly lower at 6.6 per cent of current receipts at end-June 2024 against 6.7 per cent at end-March 2024, says the RBI release.