India’s External Debt – June 2019
India’s external debt as of end-June 2019 was at USD 557.4 billion, an 8.6% rise from USD 513.1 billion seen in end of June 2018. The increase in external debt was primarily on account of an increase in commercial borrowings, non-resident deposits, and short-term trade credit. The increase in external debt was also contributed by valuation losses resulting from the depreciation of the US dollar against the Indian rupee and other major currencies. The external debt to GDP ratio remained at 19.8% at end-June 2019, the same as its level at end-March 2019.
Commercial borrowings remained the largest component of external debt, with a share of 38.4% followed by non-resident deposits (24.0%) and short-term trade credit (18.7%). Long term debt and short term debt (original maturity) formed 80.76% and 19.24% of total external debt.
Short term external debt to total debt ratio has declined to 19.7% in June 2019 from 20% in March 2019. Foreign exchange reserves to external debt ratio was at 77.1% in June 2019 while it was at 76% in March 2019. Short-term Debt to Foreign Exchange Reserves ratio has declined to 25.5% in June 2019 from 26.3% in March 2019.
USD denominated debt is the largest component of India’s external debt with a contribution of 51.5% at end-June 2019
Residual Maturity of External Debt Outstanding as at End - June 2019
Component | Short-term up to one year** | Long-term | - | -1 | Total |
- | - | 1 to 2 years | 2 to 3 years | More than 3 years | (2 to 5) |
1. Sovereign Debt (long-term) $ | 5.5 | 7.6 | 8.2 | 85.3 | 106.6 |
2. Commercial Borrowings # | 30.6 | 25.5 | 27.3 | 124.1 | 207.5 |
3. NRI deposits {(i)+(ii)+(iii)} | 94.8 | 16.8 | 13.1 | 8.8 | 133.6 |
(i) FCNR(B) | 16.2 | 3 | 2.8 | 2.3 | 24.4 |
(ii) NR(E)RA | 64.9 | 12.7 | 9.6 | 6.2 | 93.4 |
(iii) NRO | 13.7 | 1.1 | 0.7 | 0.2 | 15.8 |
4. Short-term Debt * (original maturity) | 109.7 | 109.7 | |||
Total (1 to 4) | 240.6 | 50 | 48.6 | 218.2 | 557.4 |
Short-term Debt (residual maturity) as per cent of Total External Debt | - | - | - | - | 43.2 |
Short-term Debt (residual maturity) as per cent of Reserves | - | - | - | - | 56 |
External Debt - Outstanding and Variation - June 2019
Jun-18 | Mar-19 | Jun-19 | Mar-19 over Mar-18 |
|
1. Multilateral | 56.9 | 57.5 | 59 | 3.6 |
2. Bilateral | 24.3 | 25.7 | 26.6 | 9.3 |
3. IMF | 5.6 | 5.5 | 5.5 | -1.2 |
4. Trade Credit | 8.8 | 8 | 7.8 | -11.6 |
5. Commercial Borrowings | 193.4 | 206.7 | 214.1 | 10.7 |
6. NRI Deposits | 124.3 | 130.4 | 133.6 | 7.5 |
7. Rupee Debt | 1.1 | 1.2 | 1.1 | -1 |
8. Short-term Debt | 98.7 | 108.4 | 109.7 | 11.2 |
Short-term trade credit | 96.9 | 102.4 | 104.4 | 7.7 |
Total Debt | 513.1 | 543.3 | 557.4 | 8.6 |
A. Long-term Debt (original maturity) @ | 414.4 | 434.9 | 447.7 | 8 |
B. Short-term Debt (original maturity) # | 98.7 | 108.4 | 109.7 | 11.2 |
India’s External Debt – March 2019
India’s external debt as of end March 2019 was at USD 543 billion, a 2.6% rise from USD 529.3 billion seen in end March 2018. The increase in external debt was primarily on account of an increase in short-term debt, commercial borrowings and non-resident Indian (NRI) deposits. The increase in external debt was partially offset by valuation gain resulting from the appreciation of the US dollar against Indian rupee and other major currencies. The external debt to GDP ratio stood at 19.7% at end-March 2019, lower than its level of 20.1% at end-March 2018.
Commercial borrowings formed 38% and NRI deposits formed 24% of the of total external debt. Long term debt and short term debt (original maturity) formed 80% and 18.9% of total external debt. Short term debt on residual maturity basis of less than one year formed 43.4% of total external debt and 57% of reserves.
Short term external debt to total debt ratio has increased to 20.0% in March 2019 from 19.3% in March 2018. Foreign exchange reserves to external debt ratio was at 76% in March 2019 while it was at 80.2% in March 2018. Short-term Debt to Foreign Exchange Reserves ratio has increased to 26.3% in March 2019 from 24.1% in March 2018.
USD denominated debt is the largest component of India’s external debt with a contribution of 50.5% at end-March 2019
Residual Maturity of External Debt Outstanding as at End - March 2019
Component | Short-term up to one year** | Long-term | - | -1 | Total |
- | - | 1 to 2 years | 2 to 3 years | More than 3 years | (2 to 5) |
1. Sovereign Debt (long-term) $ | 6 | 7 | 8 | 83 | 104 |
2. Commercial Borrowings # | 28 | 27 | 25 | 121 | 201 |
3. NRI deposits {(i)+(ii)+(iii)} | 94 | 16 | 12 | 9 | 130 |
(i) FCNR(B) | 16 | 2 | 2 | 2 | 23 |
(ii) NR(E)RA | 64 | 12 | 9 | 7 | 92 |
(iii) NRO | 13 | 1 | 1 | 0 | 15 |
4. Short-term Debt * (original maturity) | 108 | 108 | |||
Total (1 to 4) | 236 | 50 | 44 | 214 | 543 |
Short-term Debt (residual maturity) as per cent of Total External Debt | 43 | ||||
Short-term Debt (residual maturity) as per cent of Reserves | 57 |
External Debt - Outstanding and Variation - March 2019
2017 R | 2018 PR | 2019 P | Mar-19 over Mar-18 | |
1. Multilateral | 54.5 | 57.2 | 57.4 | 0.2 |
2. Bilateral | 23.2 | 25.4 | 25.7 | 0.3 |
3. IMF | 5.4 | 5.8 | 5.5 | -0.3 |
4. Trade Credit | 9.6 | 9.5 | 7.9 | -1.5 |
5. Commercial Borrowings | 172 | 201.8 | 206.4 | 4.6 |
6. NRI Deposits | 116.9 | 126.2 | 130.4 | 4.2 |
7. Rupee Debt | 1.2 | 1.2 | 1.2 | -0.1 |
8. Short-term Debt | 88.1 | 102.2 | 108.4 | 6.2 |
Short-term trade credit | 86.5 | 100.4 | 102.4 | 2 |
Total Debt | 471 | 529.3 | 543 | 13.7 |
A. Long-term Debt (original maturity) @ | 382.9 | 427.1 | 434.6 | 7.5 |
B. Short-term Debt (original maturity) # | 88.1 | 102.2 | 108.4 | 6.2 |
India’s External Debt – June 2018
India’s external debt as of end June 2018 was at USD 514.4 billion, a 2.8% decrease from USD 529.3 billion seen in end March 2018.Reduction in external debt was on account of a decrease in commercial borrowings, short term debt and NRI deposits. The decrease in the magnitude of external debt was primarily due to valuation gains resulting from the appreciation of the US dollar against the Indian rupee.Valuation gains due to the appreciation of the USD/INR and major currencies were placed at USD 13 billion. Excluding the valuation effect, the decrease in external debt would have been USD 1.9 billion over March 2018.
Commercial borrowings formed 37.8% and NRI deposits formed 24.2% of the of total external debt. Long term debt and short term debt (original maturity) formed 80.81% and 19.18% of total external debt. Short term debt on residual maturity basis of less than one year formed 42.9% of total external debt and 54.3% of reserves.
Short term external debt to total debt ratio has increased to 19.2% in June 2018 from 18.3% in June 2017. Foreign exchange reserves to external debt ratio was at 78.9% in June 2018 and 79.6% in June 2017. Short-term Debt to Foreign Exchange Reserves ratio has increased to 24.3% in June 2018 from 23.0% in June 2017.The external debt to GDP ratio stood at 20.4% as of June 2018, higher than its level of 20.3% at June 2017 and lower than its level of 23.4% at June 2016.
USD denominated debt is the largest component of India’s external debt with a contribution of 50.1% at end-June 2018
Residual Maturity of External Debt Outstanding as at End - June 2018
Component | Short-term up to one year | Long-term | - | -1 | Total |
- | 1 to 2 years | 2 to 3 years | More than 3 years | (2 to 5) | |
1. Sovereign Debt (long-term)$ | 5 | 7.2 | 7.6 | 85.7 | 106 |
2. Commercial Borrowings | 28 | 23.2 | 24.0 | 110.7 | 186 |
3. NRI deposits {(i)+(ii)+(iii)} | 89 | 15.7 | 9.4 | 10.4 | 124 |
(i) FCNR(B) | 16 | 3.3 | 1.6 | 1.5 | 23 |
(ii) NR(E)RA | 61 | 11.4 | 7.2 | 8.6 | 88 |
(iii) NRO | 12 | 1.0 | 0.6 | 0.3 | 14 |
4. Short-term Debt* (original maturity) | 99 | - | - | - | 99 |
Total (1 to 4) | 221 | 46.1 | 41.0 | 206.8 | 514 |
Short-term Debt (residual maturity) as per cent of Total External Debt | - | - | - | - | 43 |
Short-term Debt (residual maturity) as per cent of Reserves | - | - | - | - | 54 |
External Debt - Outstanding and Variation - June 2018
Component | June 2017 PR | March 2018 PR | June 2018 P | Jun-18 over Jun-17 | Jun-18 over Mar-18 |
1. Multilateral | 56 | 57 | 57 | 2.5 | 0.0 |
2. Bilateral | 23 | 25 | 24 | 5.2 | -4.2 |
3. IMF | 6 | 6 | 6 | 1.1 | -3.3 |
4. Trade Credit | 10 | 10 | 9 | -7.2 | -4.9 |
5.Commercial Borrowings | 183 | 202 | 195 | 6.2 | -3.8 |
6. NRI Deposits | 118 | 126 | 124 | 5.1 | -1.5 |
7. Rupee Debt | 1 | 1 | 1 | -6.8 | -6.8 |
8. Short-term Debt | 89 | 102 | 99 | 10.9 | -3.4 |
Short-term trade credit | 87 | 100 | 97 | 11.3 | -3.5 |
Total Debt | 486 | 529 | 514 | 6.0 | -2.8 |
A. Long-term Debt (original maturity) | 397 | 427 | 416 | 4.9 | -2.7 |
B. Short-term Debt (original maturity) | 89 | 102 | 99 | 10.9 | -3.0 |
India’s External Debt – March 2018
India’s external debt as of end March 2018 was at USD 529.7 billion, an increase of USD 58.4 billion from USD 471.3 billion seen in end March 2017. India’s external debt rose 12.4%, the most in 5 years, on the back of increase in commercial borrowings, short-term debt and non-resident Indian (NRI) deposits. The increase in the magnitude of external debt was partly due to valuation loss resulting from the depreciation of the US dollar against the Indian rupee and other major currencies. Commercial borrowings rose by 17.4% and NRI deposits by 8.0%. Commercial borrowings formed 38.2% and NRI deposits formed 23.8% of the of total external debt. Long term debt and short term debt (original maturity) formed 80.7% and 19.3% of total external debt. Short term debt on residual maturity basis of less than one year formed 42% (41.6% in March 2017 and 41.1% in June 2017) of total external debt and 52.3% of reserves (52.9% in March 2017 and 51.6% in June 2017).
Short term external debt to total debt ratio has increased to 19.3% in March 2018 from 18.7% in March 2017. Foreign exchange reserves to external debt ratio has improved to 80.2% in March 2017 from 78.5% in March 2017. Short-term Debt to Foreign Exchange Reserves ratio has increased to 24.1% in March 2018 from 23.8% in March 2017.The external debt to GDP ratio stood at 20.5% as of March 2018, higher than its level of 20.0% at March 2017 and lower than its level of 23.4% at June 2016.
Residual Maturity of External Debt Outstanding as at End- March 2018
Component | Short-term up to one year | 1 to 2 years | 2 to 3 years | More than 3 years | Total |
1. Sovereign Debt (long-term) $ | 5 | 8 | 8 | 90.4 | 112 |
2. Commercial Borrowings # | 26 | 21 | 26 | 117.4 | 190 |
3. NRI deposits {(i)+(ii)+(iii)} | 89 | 17 | 10 | 10.7 | 126 |
(i) FCNR(B) | 15 | 4 | 2 | 1.5 | 22 |
(ii) NR(E)RA | 62 | 12 | 7 | 8.9 | 90 |
(iii) NRO | 12 | 1 | 1 | 0.3 | 14 |
4. Short-term Debt* (Original maturity) | 102 | 102 | |||
Total (1 to 4) | 222 | 45 | 44 | 218.5 | 530 |
Short-term Debt (residual maturity) as per cent of Total External Debt | - | - | - | - | 42 |
Short-term Debt (residual maturity) as per cent of Reserves | - | - | - | - | 51 |
External Debt - Outstanding and Variation - March 2018
- | Outstanding at the end of USD billion) | - | - | Percentage variation (%) | - |
Component | 2016 R | 2017 | 2018 | Mar-17 over Mar-16 | Mar-18 over Mar-17 |
1. Multilateral | 54 | 54.5 | 57.3 | 0.9 | 5.1 |
2. Bilateral | 22 | 23.2 | 25.3 | 3.4 | 9.2 |
3. IMF | 6 | 5.4 | 5.8 | -3.5 | 6.9 |
4. Trade Credit | 11 | 9.6 | 9.4 | -8.9 | -1.7 |
5.Commercial Borrowings | 181 | 172.4 | 202.3 | -4.5 | 17.4 |
6. NRI Deposits | 127 | 116.9 | 126.2 | -7.9 | 8.0 |
7. Rupee Debt | 1 | 1.2 | 1.2 | -3.9 | -1.2 |
8. Short-term Debt | 84 | 88.1 | 102.2 | 5.5 | 15.9 |
Of which Short-term trade credit | 80 | 86.5 | 100.4 | 8.1 | 16.1 |
Total External Debt | 485 | 471.3 | 529.7 | -2.8 | 12.4 |
A. Long-term Debt | 401 | 383.2 | 427.5 | -4.5 | 11.6 |
B. Short-term Debt | 84 | 88.1 | 102.2 | 5.5 | 15.9 |
India’s External Debt – June 2017
India’s external debt as of end June 2017 stood at USD 485.8 billion, an increase of USD 6.2 billion from USD 479.6 billion seen in end June 2016. India external debt rose primarily on account of an increase in inflow of foreign portfolio investment into the debt segment of domestic market under commercial borrowings.Secondly the increase in the magnitude of external debt was partly due to valuation loss resulting from the depreciation of the US dollar against the Indian rupee and other major currencies.Commercial borrowings rose by 4.5% while NRI deposits declined by 6.4%. Commercial borrowings formed 37.8% and NRI deposits formed 24.3% of the of total external debt. Long term debt and short term debt (original maturity) formed 79.77% and 18.11% of total external debt. Short term debt of residual maturity of less than one year formed 41.1% (41.5% in March 2017 and 42.4% in June 2016) of total external debt and 51.6% of reserves (52.9% in March 2017 and 55.9% in June 2016).
Short term external debt to total debt ratio has decreased to 18.3% in June 2017 from 18.6% in March 2017. Foreign exchange reserves to external debt ratio has improved to 79.6% in June 2017 from 78.4% in March 2017.Foreign exchange reserves to short term external debt ratio has decreased to 23.0% in June 2017 from 23.8% in March 2017.The external debt to GDP ratio stood at 20.3% as of June 2017, higher than its level of 20.2% at March 2017 and lower than its level of 23.4% at June 2016.
External Debt - Outstanding and Variation - June 2017
- | Outstanding at the end of USD billion) | - | - | Percentage variation (%) | - |
Component | June 2016 R | March 2017 PR | June 2017 P | Jun-17 over Jun-16 | Jun-17 over Mar-17 |
1. Multilateral | 54.40 | 54.5 | 55.5 | 2.1 | 1.8 |
2. Bilateral | 23.90 | 23.20 | 23.1 | -3.5 | -0.5 |
3. IMF | 5.60 | 5.4 | 5.5 | -0.5 | 2.30 |
4. Trade Credit | 10.5 | 9.8 | 9.8 | -7.30 | 0 |
5.Commercial Borrowings | 175.70 | 172.9 | 183.60 | 4.5 | 6.2 |
6. NRI Deposits | 126.30 | 116.9 | 118.2 | -6.4 | 1.20 |
7. Rupee Debt | 1.1 | 1.20 | 1.20 | 10.8 | -1.20 |
8. Short-term Debt | 82.10 | 88 | 88.80 | 8.20 | 1 |
Of which Short-term trade credit | 79.7 | 86.5 | 87.10 | 9.20 | 0.70 |
Total External Debt | 479.6 | 471.90 | 485.8 | 1.3 | 3 |
A. Long-term Debt | 397.5 | 383.90 | 397 | -0.1 | 3.40 |
B. Short-term Debt | 82.10 | 88 | 88.80 | 8.20 | 1 |
Residual Maturity of External Debt Outstanding as at End-June 2017
Component | Short-term up to one year | 1 to 2 years | 2 to 3 years | More than 3 years | Total |
1. Sovereign Debt (long-term) $ | 4.80 | 7.30 | 7.80 | 83.80 | 103.60 |
2. Commercial Borrowings # | 25 | 22.70 | 24.20 | 103.10 | 175.10 |
3. NRI deposits {(i)+(ii)+(iii)} | 80.9 | 16.8 | 9.9 | 10.70 | 118.2 |
(i) FCNR(B) | 11.4 | 5.9 | 2.2 | 1.40 | 20.90 |
(ii) NR(E)RA | 58.80 | 10.10 | 6.9 | 8.9 | 84.60 |
(iii) NRO | 10.60 | 0.9 | 0.8 | 0.4 | 12.70 |
4. Short-term Debt* (Original maturity) | 88.80 | - | - | - | 88.80 |
Total (1 to 4) | 199.5 | 46.90 | 41.90 | 197.60 | 485.8 |
Short-term Debt (residual maturity) as per cent of Total External Debt | - | - | - | - | 41.1 |
Short-term Debt (residual maturity) as per cent of Reserves | - | - | - | - | 51.6 |
Government and Non-Government External Debt - June 2017
Component | End-March | - | - | End-June |
USD billion | 2,015 | 2,016 | 2017 PR | 2017 P |
A. Sovereign Debt (I+II) | 89.7 | 93.4 | 95.8 | 103.7 |
(As a percentage of GDP) | 4.5 | 4.5 | 4.1 | 4.3 |
I. External Debt on Government Account under External Assistance | 58.5 | 61.1 | 62.8 | 64 |
II. Other Government External Debt @ | 31.3 | 32.4 | 33 | 39.7 |
B. Non-Government Debt # | 385 | 391.6 | 376.1 | 382.1 |
(As a percentage of GDP) | 19.40 | 19 | 16.1 | 15.9 |
C. Total External Debt (A+B) | 474.70 | 485 | 471.9 | 485.8 |
(As a percentage of GDP) | 23.90 | 23.5 | 20.2 | 20.3 |
India’s External Debt – March 2017
India’s external debt to GDP ratio, debt coverage ratio and foreign exchange reserves to external debt ratio showed sharp improvement in the last fiscal year ended March 2017. The improvement in external debt ratios bodes well for the INR and would encourage capital flows.
India’s external debt as of end March 2017 stood at USD 471.9 billion, a decrease of USD 13.1 billion from USD 485 billion seen in end March 2016. Adjusting for valuation gains of USD 1.5 billion, the external debt would have been lower by USD 14.6 billion instead of USD 13.1 billion as at the end of March 2017. India external debt declined primarily on account of a decline in Non-resident Indian (NRI) deposits and commercial borrowings. Commercial borrowings declined by 4.2% while NRI deposits declined by 7.9%. Commercial borrowings formed 36.6% and NRI deposits formed 24.7% the of total external debt. Long term debt and short term debt (original maturity) formed 81.35% and 18.65% of total external debt. Short term debt of residual maturity of less than one year formed 41.5% of total external debt and 52.9% of reserves.
Short term external debt to total debt ratio has increased to 18.6% in March 2017 from 17.2% in March 2016 Foreign exchange reserves to external debt ratio has improved to 78.4% in March 2017 from 74.3% in March 2016. Foreign exchange reserves to short term external debt ratio has improved to 23.8% in March 2017 from 23.1% in March 2016.
External Debt - Outstanding and Variation (US$ billion) (June 2016)
Item | Outstanding at the end of March | - | - | - | Percentage variation |
No | 2,015 | March 2016 | 2017 P | March 16 over March 15 | March 17 over March 16 |
1. Multilateral | 52.40 | 54 | 54.5 | 3 | 0.9 |
2. Bilateral | 21.70 | 22.5 | 23.20 | 3.40 | 3.1 |
3. IMF | 5.5 | 5.60 | 5.4 | 2.1 | -3.5 |
4. Trade Credit | 12.60 | 10.60 | 9.70 | -15.60 | -9 |
5.Commercial Borrowings | 180.3 | 180.70 | 173.10 | 0.2 | -4.2 |
6. NRI Deposits | 115.2 | 126.9 | 116.9 | 10.20 | -7.9 |
7. Rupee Debt | 1.5 | 1.3 | 1.20 | -15.10 | -3.90 |
8. Short-term Debt (Of Which) | 85.5 | 83.4 | 88 | -2.5 | 5.5 |
Short-term trade credit | 81.60 | 80 | 86.5 | -2 | 8.1 |
Total Debt | 474.70 | 485 | 471.90 | 2.2 | -2.7 |
A. Long-Term Debt | 389.20 | 401.6 | 383.90 | 3.2 | -4.4 |
B. Short-Term Debt | 85.5 | 83.4 | 88 | -2.5 | 5.5 |
Residual Maturity of External Debt Outstanding as at End-March 2017
March 2017
Component | Short-term up to one year | Long-term | Long-term | Long-term | Total |
- | - | 1 to 2 years | 2 to 3 years | More than 3 years | (2 to 5) |
1 | 2 | 3 | 4 | 5 | 6 |
1. Sovereign Debt (long-term) $ | 4.60 | 6.4 | 6.9 | 77.8 | 95.7 |
2. Commercial Borrowings # | 24 | 22.6 | 22.3 | 102.5 | 171.3 |
3. NRI deposits {(i)+(ii)+(iii)} | 79.30 | 16.6 | 10.2 | 10.7 | 116.9 |
(i) FCNR(B) | 11.4 | 5.7 | 2.5 | 1.3 | 21 |
(ii) NR(E)RA | 57.40 | 10 | 6.8 | 9 | 83.2 |
(iii) NRO | 10.5 | 0.9 | 0.8 | 0.4 | 12.70 |
4. Short-term Debt* (original maturity) | 88 |
|
|
| 88 |
Total (1 to 4) | 195.9 | 45.6 | 39.3 | 191.1 | 471.90 |
Memo Items | - | - | - | - | - |
Short-term Debt (residual maturity) as per cent of Total External Debt | - | - | - | - | 41.5 |
Short-term Debt (residual maturity) as per cent of Reserves | - | - | - | - | 52.90 |
Government and Non-Government External Debt
Component | End-March | End-March | End-March | End-March |
null | 2,014 | 2,015 | 2016 R | 2017 P |
1 | 2 | 3 | 4 | 5 |
A. Sovereign Debt (I+II) | 83.7 | 89.7 | 93.4 | 95.8 |
(As a percentage of GDP) | 4.5 | 4.5 | 4.5 | 4.1 |
I. External Debt on Government Account under External Assistance | 62.2 | 58.5 | 61.1 | 62.8 |
II. Other Government External Debt @ | 21.5 | 31.3 | 32.4 | 33 |
B. Non-Government Debt # | 362.5 | 385 | 391.6 | 376.1 |
(As a percentage of GDP) | 19.40 | 19.40 | 19 | 16.1 |
C. Total External Debt (A+B) | 446.20 | 474.70 | 485 | 471.9 |
(As a percentage of GDP) | 23.90 | 23.90 | 23.5 | 20.2 |
India’s Key External Debt Indicators
End-March | External Debt | Ratio of External Debt to GDP | Debt Service Ratio | Ratio of Foreign Exchange Reserves to Total Debt | Ratio of Concessional Debt to Total Debt | Ratio of Short-Term Debt to Foreign Exchange Reserves (Per cent) | Ratio of Short-Term Debt to Total Debt |
- | (US$ billion) | % | % | % | % | % | % |
1991 | 83.80 | 28.70 | 35.3 | 7 | 45.90 | 146.5 | 10.20 |
1996 | 93.7 | 27 | 26.2 | 23.1 | 44.7 | 23.20 | 5.4 |
2001 | 101.30 | 22.5 | 16.6 | 41.7 | 35.4 | 8.6 | 3.6 |
2006 | 139.1 | 16.8 | 10.1# | 109 | 28.40 | 12.9 | 14 |
2007 | 172.4 | 17.5 | 4.7 | 115.60 | 23 | 14.10 | 16.3 |
2008 | 224.4 | 18 | 4.8 | 138 | 19.70 | 14.8 | 20.40 |
2009 | 224.5 | 20.3 | 4.4 | 112.2 | 18.7 | 17.2 | 19.3 |
2010 | 260.90 | 18.2 | 5.8 | 106.9 | 16.8 | 18.8 | 20.1 |
2011 | 317.90 | 18.2 | 4.4 | 95.9 | 14.9 | 21.3 | 20.40 |
2012 | 360.8 | 21.1 | 6 | 81.60 | 13.3 | 26.6 | 21.70 |
2013 | 409.40 | 22.40 | 5.9 | 71.3 | 11.10 | 33.1 | 23.6 |
2014 | 446.20 | 23.90 | 5.9 | 68.2 | 10.4 | 30.1 | 20.5 |
2015 | 474.70 | 23.90 | 7.6 | 72 | 8.8 | 25 | 18 |
2016 R | 485 | 23.5 | 8.8 | 74.3 | 9 | 23.1 | 17.2 |
2017 P | 471.90 | 20.20 | 8.3 | 78.4 | 9.3 | 23.8 | 18.6 |
India’s External Debt – December 2016
India’s external debt as of end December 2016 stood at USD 456.1 billion, a decrease of USD 29.0 billion, at end-December 2016 over the level at end-March 2016. The decline in external debt during the period was due to the fall in long-term external debt, particularly the fall in NRI deposits reflecting the redemption of FCNR (B) deposits and decline in commercial borrowings with fall in both commercial bank loans and securitized borrowings. The valuation gain was US$ 7.3 billion. This implies that excluding the valuation effect, the decrease in external debt would have been lower at US$ 21.7 billion at end-December over end-March 2016. Long-term debt at US dollar 372.2 billion, declined by US dollar 29.4 billion (7.3%) at end-December 2016 over the level at end-March 2016, short-term debt increased marginally by 0.5% to US dollar 83.8 billion.
Many key external debt indicators of India show improvement at end-December 2016 over end-March 2016. Besides, total external debt falling by 6.0% during this period, the foreign exchange cover for external debt increased to 78.7% from 74.3% and the ratio of concessional debt to total external debt increased to 9.2% from 9.0%. While the share of short-term debt (original maturity) to foreign exchange reserves increased marginally to 23.4% from 23.1% during this period, the share of short-term debt (residual maturity) to foreign exchange reserves fell to 52.6% from 57.4%.
India’s External Debt – September 2016
India’s external debt stock stood at USD 484.3 billion, recording a decline of USD 0.8 billion (0.2%) over the level at end-March 2016. The fall in external debt during the period was due to commercial borrowings and short term external debt. However, on a sequential basis, total external debt at end-September 2016 increased by USD 4,768 million from the end-June 2016 level. Valuation loss was placed at USD 1.0 billion. This implies that excluding the valuation effect, the decrease in debt would have been higher by USD 1.8 billion at end-September 2016 over the end-March 2016 level. Long-term debt at end-September 2016 was placed at USD 403.1 billion, showing an increase of USD 1.4 billion (0.4% ) over the level at end-March 2016. Short-term external debt witnessed a decline of 2.6% and stood at USD 81.2 billion at end September 2016.
The ratio of short-term external debt by original maturity to foreign exchange reserves stood at 21.8% at end-September 2016 lower than the 22.6% at end June 2016 and 23.1% at end-March 2016. The ratio of concessional debt to total external debt was 9.4% at end-September 2016, same as at end-June 2016 and a marginal increase from the 9.0% at end March 2016. The ratio of short-term external debt by original maturity to foreign exchange reserves stood at 21.8% at end-September 2016 lower than the 22.6% at end June 2016 and 23.1% at end-March 2016.
India’s External Debt – June 2016
India’s external debt as of end June 2016 stood at USD 479.7 billion, a decrease of USD 5.4 billion from USD 485.6 billion seen in end March 2016. Adjusting for valuation gains of USD 1.4 billion, external debt would have be lower by USD 4 billion over end March 2016 levels. Commercial borrowings led the fall in external debt, declining by 2.8% from end March 2016 largely due to FII’s not investing in corporate bonds. FII’s have net sold USD 1.1 billion in the April-June 2016 period. Commercial borrowings formed 36.6% and NRI deposits formed 26.3% of total external debt. Long term debt and short term debt (original maturity) formed 82.9% and 17.1% of total external debt. Short term debt of residual maturity of less than one year formed 42.5% of total external debt and 55.9% of reserves. Short term debt of residual maturity of less than one year will see decline in the third quarter of fiscal 2016-17 as FCNR B deposits of around USD 20 billion mature. Short term external debt ratios will improve as FCNR B deposit matures and RBI is well prepared for the outflows. Read our analysis on FCNR B Deposit maturity.
External debt ratios have improved as of June 2016. Short term external debt to total debt ratio has come down from 18% to 17.1% since March 2015 and from levels of 20.6% seen in March 2014. Foreign exchange reserves to external debt ratio has improved from 71.9% to 75.8% since March 2015 and from levels of 68.2% seen in March 2014. Short term external debt to foreign exchange reserves ratio has improved from 25% to 22.6% and from 30.1% seen last year.
Improving external debt ratios coupled with slow growth in external debt is positive for the INR as it can withstand shocks from global issues such as Fed rate hikes. INR is affected by risk aversion on global events and India needs to keep its external debt position stable to withstand capital outflows.
India’s External Debt – March 2016
FCNR B deposit maturity in the months of September to November 2013 for around USD 20 billion has led to short term external debt of residual maturity of less than one year ratios deteriorating. Short term external debt of residual maturity of less than one year was 42.6% of total external debt as of March 2016 against 38.2% seen last year and stood at 57.4% of total foreign exchange reserves against 53.2% seen last year. Short term external debt ratios will improve as FCNR B deposit matures and RBI is well prepared for the outflows. Read our analysis on FCNR B Deposit maturity.
India’s external debt as of end March 2016 stood at USD 485.6 billion an increase of USD 10.6 billion or 2.2% since March 2015 On a quarter on quarter basis external debt increased by USD 5,4 billion. Adjusting for valuation gains of USD 5.9 billion, external debt would have be higher by USD 16.4 billion over end March 2015 levels. Commercial borrowings formed 37.3% and NRI deposits formed 26.1% of total external debt. Long term debt and short term debt (original maturity) formed 83% and 17% of total external debt.
External debt ratios are improving. Short term external debt to total debt ratio has come down from 18% to 17.2% since March 2015 and from levels of 20.6% seen in March 2014. Foreign exchange reserves to external debt ratio has improved from 71.9% to 74.2% since March 2015 and from levels of 68.2% seen in March 2014. Short term external debt to foreign exchange reserves ratio has improved from 25% to 23.1% and from 30.1% seen last year.
Improving external debt ratios coupled with slow growth in external debt is positive for the INR as it can withstand shocks from global issues such as Brexit. INR is affected by risk aversion on global events and India’s needs to keep its external debt position stable to withstand capital outflows.
India’s External Debt – December 2015
India’s external debt as of end December 2015 stood at USD 480.2 billion an increase of USD 4.9 billion or 1% since end March 2015 and an increase of 4.6% on a year on year basis. On a quarter on quarter basis external debt declined by USD 1.2 billion. Adjusting for valuation gains of USD 7.9 billion, external debt would have be higher by USD 12.8 billion over end March 2015 levels. Commercial borrowings formed 38.2% and NRI deposits formed 25.5% of total external debt. Long term debt and short term debt (original maturity) formed 83% and 17% of total external debt.
External debt ratios are improving. Short term external debt to total debt ratio has come down from 18% to 17% since March 2015 and from levels of 20.6% seen in March 2014. Foreign exchange reserves to external debt ratio has improved from 71.9% to 73% since March 2015 and from levels of 68.2% seen in March 2014. Short term external debt to foreign exchange reserves ratio has improved from 25% to 23.3% and from 30.1% seen last year.
Improving external debt ratios coupled with slow growth in external debt is positive for the INR as it can withstand shocks from global issues including Fed rate hikes and China Yuan Devaluation. The Fed hiked rates for the first time since 2007 in December 2015 and has guided for more rate hikes in 2016 though at a muted pace, while China devalued the Yuan twice over the last one year, in August 2015 and January 2016, leading to global risk aversion and capital outflows.
India’s External Debt – September 2015
India’s external debt as of end September 2015 stood at USD 483.2 billion an increase of USD 8 billion or 1.7% since end March 2015 and an increase of 5.9% on a year on year basis. On a quarter on quarter basis external debt declined by 0.1%. Adjusting for valuation gains of USD 5.7 billion, external debt would have be higher by USD 13.7 billion, 2.9% over end March 2015 levels. Commercial borrowings formed 37.7% and NRI deposits formed 25.2% of total external debt. Long term debt and short term debt (original maturity) formed 82.2% and 17.8% of total external debt.
External debt ratios are improving. Short term external debt to total debt ratio has come down from 18% to 17.8% since March 2015 and from levels of 20.6% seen in March 2014. Foreign exchange reserves to external debt ratio has improved from 71.9% to 72.5% since March 2015 and from levels of 68.2% seen in March 2014. Short term external debt to foreign exchange reserves ratio has improved from 25% to 24.6% and from 30.1% seen last year.
Improving external debt ratios coupled with slow growth in external debt is positive for the INR as it can withstand shocks from global issues including Fed rate hikes. The Fed hiked rates for the first time since 2007 in December 2015 and has guided for more rate hikes in 2016, which could lead to global risk aversion and capital outflows.
India’s External Debt – June 2015
India’s external debt as of end June 2015 stood at USD 483.4 billion ( revised upwards from USD 482.9 billion), up by 1.8% from levels of USD 475.8 billion seen in March 2015 and by 6.6% from levels of USD 453.1 billion seen in June 2014. Adjusting for valuation gains of the USD against the INR and other currencies, external debt would have been higher by USD 10.1 billion during the quarter. Table 1 Commercial borrowings formed 38.4% of external debt followed by NRI deposits at 24.8% and short term trade credit at 16.6%. Commercial borrowings rose 2.5% qoq and 18.9% yoy while NRI deposits rose 4.1% qoq and 12.8% yoy.Table 2.
FIIs investments in government bonds have been restricted to bonds of minimum maturity of three years and that has resulted in FIIs investments in treasury bills coming off leading to fall in short term external debt ratios. Table 3. Short term debt has come off to USD 84.4 billion as of June 2015, down 0.4% qoq and 6.3% yoy. Short term external debt to total external debt was at 17.5% from 17.9% seen end March 2015 and short term external debt to foreign exchange reserves was at 23.7% from 24.8%. Short term external debt of residual maturity of less than one year was 38.3% of total external debt and 51.9% of foreign exchange reserves. India’s total external debt to GDP was at 24% from 23.7% and to foreign exchange reserves was at 73.7% from 72%. Table 4
India has to keep down its short term debt to prevent global shocks from affecting its currency and reserves position.
India’s External Debt – March 2015
India’s External Debt as of end March 2015 stood at USD 475.8 billion, up by 6.6% from levels of USD 446.3 billion seen in end March 2014. Adjusting for Valuation Gains of the USD against the INR and other currencies, external debt would have been higher by USD 45.7 billion at USD 492 billion, a rise of 10.2% yesr on year. The USD has appreciated against most the INR and other currencies since March.
The bright part of the external debt numbers is the improvement in ratios of short term external debt, which is debt due in one year or less period of time. Short term external debt fell 7.6% year on year from USD 91.7 billion to USD 84.7 billion. Short term external debt of residual maturity of less than one year was USD 185.2 billion, which is 38.9% of total external debt. This ratio is down from 39.6% seen last year. In terms of short term external debt of residual maturity of less than one year to foreign exchange reserves, the ratio has improved to 54.2% as of March 2015 from 57.4% as of March 2014.
Improving short term external debt ratios places less pressure on the INR at times when there is risk aversion in global markets. Lower the short term external liabilities, lower the risk of high capital outflows in times of stress.
In terms of major components of external debt, commercial borrowing and NRI deposits form 38.2% and 24% of total external debt. Commercial borrowings and NRI deposits rose 21.7% and 10.9% year on year respectively leading to the 6.6% rise in total external debt. India has been witnessing rising external commercial borrowings and more flows from NRIs over the last two years. Table 1. In fiscal year 2013-14, FCNR B deposits of USD 26 billion accounted for most of the USD 33 billion inflows from NRI deposits. RBI had opened a FCNR B swap window for banks in September 2013 to attract FCNR B flows to prevent INR depreciation.
External debt ratios have deteriorated since 2007-08
India’s external debt has more than doubled from levels of USD 224 billion seen in 2008 to levels of USD 475.8 billion as of end March 2015. Fx Reserves as % of external debt has deteriorated from 138% of external debt to 71.8% of external debt as increase in fx reserves has lagged the increase in external debt. Table 2. Fx reserves have increased from USD 304 billion seen in 2008 to USD 341 billion as of March 2015. Deterioration in levels of external debt as % of fx reserves is a worry when there is capital flight and this will lead to a sharp fall in value of the Indian Rupee. Fx reserves have increased from USD 300 billion to USD 340 billion over the April 2014-March 2015 period. RBI will have to buy USD to shore up fx reserves to improve the external debt to fx reserves ratio.
In fact the INR has depreciated from levels of Rs 40 to the USD as of end March 2008 to levels of Rs 63.57as of 30th June 2015. A good part of this fall can be explained by India’s deteriorating external debt position. Ratio of external debt to GDP has moved up from levels of 18% to 23.8% in the 2008-2015 period. Ratio of short term debt to foreign exchange reserves has moved up from 14.8% to 24.8%.
Tutorial on External Debt
Build up of external debt in fast growth economies is accompanied by a rally in asset and currency markets. However when external debt becomes unsustainable, the repercussions are severe with economic contraction and sharp fall in asset and currency values. Over the years, the boom bust cycle led by external debt has panned geographies. South America in the 1980’s, South East Asia in the 1990’s and Iceland in the 2000’s. The build up of external debt of a country leads to an asset boom as foreign money seeking high returns go into speculative asset classes. When the asset bubble bursts, the foreign money tries to find its way out of the country leading to panic selling of assets. Central banks have grappled with external debt problems and have resorted to various methods including sterilisation of flows, taxes on flows and capital controls. Some of the methods adopted by central banks have worked and some have not but the underlying rise and fall in asset prices have not been contained.
What is external debt?
External debt is the money owed to non residents in the form of interest and principle payment. Debt securities including bonds and money market instruments, deposits, loans and advances and trade credits are forms of external debt. External debt is categorised into long term and short term. Long term external debt is any debt that has maturity of one year or more while short term external debt is any debt that has maturity of one year or less.
Trade credits, money market securities, short term loans, foreign currency deposits and debt/loans with residual maturity of one year and below are all categorised as short term debt.
How to look at external debt?
External debt is looked at in terms of external debt to GDP ratio, net interest payment to GDP ratio, short term external debt to total external debt ratio and external debt to foreign exchange reserves ratios. The higher the ratios the higher the risk an economy is running if there is a run on the currency. The external debt indicators for all the countries that suffered crisis have been at higher levels.
The South American debt crisis in the 1980’s saw external debt to GDP ratios for the countries in the region rise by multi fold times. South American countries defaulted on their external debt due to the sharp rise in debt levels.
The South East Asian crisis in the 1990’s saw countries in the region devaluing their currencies and imposing capital controls to stem the crisis of capital outflows. Countries such as Thailand, Malaysia, Indonesia, Korea had all seen their short term external debt to total external debt ratios rise significantly to over 60% and when capital started moving out the countries found it impossible to service the short term debt.
External Debt - Outstanding and Variation (US$ billion) (June 2016)
Item | Outstanding at the end of March | - | - | - | Percentage variation |
No | 2,015 | March 2016 | 2017 P | March 16 over March 15 | March 17 over March 16 |
1. Multilateral | 52.40 | 54 | 54.5 | 3 | 0.9 |
2. Bilateral | 21.70 | 22.5 | 23.20 | 3.40 | 3.1 |
3. IMF | 5.5 | 5.60 | 5.4 | 2.1 | -3.5 |
4. Trade Credit | 12.60 | 10.60 | 9.70 | -15.60 | -9 |
5.Commercial Borrowings | 180.3 | 180.70 | 173.10 | 0.2 | -4.2 |
6. NRI Deposits | 115.2 | 126.9 | 116.9 | 10.20 | -7.9 |
7. Rupee Debt | 1.5 | 1.3 | 1.20 | -15.10 | -3.90 |
8. Short-term Debt (Of Which) | 85.5 | 83.4 | 88 | -2.5 | 5.5 |
Short-term trade credit | 81.60 | 80 | 86.5 | -2 | 8.1 |
Total Debt | 474.70 | 485 | 471.90 | 2.2 | -2.7 |
A. Long-Term Debt | 389.20 | 401.6 | 383.90 | 3.2 | -4.4 |
B. Short-Term Debt | 85.5 | 83.4 | 88 | -2.5 | 5.5 |
External Debt - Outstanding and Variation (US$ billion) (March 2016)
Item | Outstanding at the end of | - | - | - | Percentage variation | - | - |
No | 2,014 | 2,015 | 2,016 | Mar-15 over Mar-14 | Mar-16 over Mar-15 | Mar-15 over Mar-14 | Mar-16 over Mar-15 |
1. Multilateral | 53.40 | 52.40 | 54 | -1 | 1.6 | -1.90 | 3 |
2. Bilateral | 24.70 | 21.8 | 22.5 | -3 | 0.8 | -12 | 3.5 |
3. IMF | 6.10 | 5.5 | 5.60 | -0.70 | 0.1 | -10.8 | 2.1 |
4. Trade Credit | 15.5 | 12.60 | 10.70 | -2.90 | -2 | -18.7 | -15.5 |
5.Commercial Borrowings | 149.4 | 180.60 | 181.3 | 31.3 | 0.70 | 20.90 | 0.4 |
6. NRI Deposits | 103.80 | 115.2 | 126.9 | 11.3 | 11.8 | 10.9 | 10.20 |
7. Rupee Debt | 1.5 | 1.5 | 1.3 | 0 | -0.2 | 2.6 | -15.10 |
8. Short-term Debt (Of Which) | 91.7 | 85.5 | 83.4 | -6.2 | -2.1 | -6.7 | -2.5 |
Short-term trade credit | 81.7 | 81.60 | 80 | -0.1 | -1.6 | -0.1 | -2 |
Total Debt | 446.20 | 475 | 485.6 | 28.90 | 10.60 | 6.5 | 2.2 |
A. Long-Term Debt | 354.5 | 389.5 | 402.20 | 35 | 12.70 | 9.9 | 3.30 |
B. Short-Term Debt | 91.7 | 85.5 | 83.4 | -6.2 | -2.1 | -6.7 | -2.5 |
External Debt - Outstanding and Variation (US$ billion) (December 2015)
Item | Outstanding at the end of | - | - | - | Percentage variation | - | - |
No | March 2015 PR | June 2015 P | Sept 2015 P | Dec. 2015 | Sept. 2015 over March 2015 | Sept. 2015 over June 2015 | Dec. 2015 over Sept 2015 |
1. Multilateral | 52.40 | 53.40 | 53.40 | 53.2 | 1.8 | -0.1 | 0.2 |
2. Bilateral | 21.6 | 20.8 | 21.3 | 21.25 | -1.70 | 0.70 | -0.5 |
3. IMF | 5.5 | 5.60 | 5.60 | 5.51 | 1.70 | -0.2 | -1.3 |
4. Trade Credit | 12.60 | 12.10 | 11.60 | 11.11 | -8.1 | -2.40 | -4.4 |
5.Commercial Borrowings | 180.9 | 185.4 | 182.3 | 18.36 | 0.8 | -1.8 | 1 |
6. NRI Deposits | 115.2 | 119.9 | 121.80 | 122.36 | 5.80 | 1.6 | 0.70 |
7. Rupee Debt | 1.5 | 1.40 | 1.1 | 1.27 | -25.70 | -20 | 13.8 |
8. Short-term Debt (Of Which) | 84.7 | 84.4 | 86.10 | 81.56 | 0.70 | 1.90 | 0.5 |
Short-term trade credit | 80.80 | 80 | - | - | - | - | - |
Total Debt | 474.40 | 482.90 | 483.20 | 480.18 | 1.70 | -0.1 | -0.2 |
A. Long-Term Debt | 389.70 | 398.5 | 397.1 | 398.62 | 1.90 | -0.5 | 0.5 |
B. Short-Term Debt | 84.7 | 84.4 | 86.10 | 81.56 | 0.70 | 1.90 | -3.80 |
External Debt - Outstanding and Variation (US$ billion) (September 2015)
Item | Outstanding at the end of | - | - | Percentage variation | - |
No | March 2015 PR | June 2015 P | Sept 2015 P | Sept. 2015 over March 2015 | Sept. 2015 over June 2015 |
1. Multilateral | 52.40 | 53.40 | 53.40 | 1.8 | -0.1 |
2. Bilateral | 21.6 | 20.8 | 21.3 | -1.70 | 0.70 |
3. IMF | 5.5 | 5.60 | 5.60 | 1.70 | -0.2 |
4. Trade Credit | 12.60 | 12.10 | 11.60 | -8.1 | -2.40 |
5.Commercial Borrowings | 180.9 | 185.4 | 182.3 | 0.8 | -1.8 |
6. NRI Deposits | 115.2 | 119.9 | 121.80 | 5.80 | 1.6 |
7. Rupee Debt | 1.5 | 1.40 | 1.1 | -25.70 | -20 |
8. Short-term Debt (Of Which) | 84.7 | 84.4 | 86.10 | 0.70 | 1.90 |
Short-term trade credit | 80.80 | 80 | - | - | - |
Total Debt | 474.40 | 482.90 | 483.20 | 1.70 | -0.1 |
A. Long-Term Debt | 389.70 | 398.5 | 397.1 | 1.90 | -0.5 |
B. Short-Term Debt | 84.7 | 84.4 | 86.10 | 0.70 | 1.90 |
India’s Key External Debt Indicators (September 2015)
March | External Debt | Ratio of External Debt to GDP | Debt Service Ratio | Ratio of Foreign Exchange Reserves to Total Debt | Ratio of Concessional Debt to Total Debt | Ratio of Short-Term Debt to Foreign Exchange Reserves | Ratio of Short-Term Debt to Total Debt |
Year | (US $ billion) | (per cent) | (per cent) | (per cent) | (per cent) | (per cent) | (per cent) |
1991 | 83.80 | 28.70 | 35.3 | 7 | 45.90 | 146.5 | 10.20 |
1996 | 93.7 | 27 | 26.2 | 23.1 | 44.7 | 23.20 | 5.4 |
2001 | 101.30 | 22.5 | 16.6 | 41.7 | 35.4 | 8.6 | 3.6 |
2006 | 139.1 | 16.8 | 10.1# | 109 | 28.40 | 12.9 | 14 |
2007 | 172.4 | 17.5 | 4.7 | 115.60 | 23 | 14.10 | 16.3 |
2008 | 224.4 | 18 | 4.8 | 138 | 19.70 | 14.8 | 20.40 |
Iceland, which was affected by external debt crisis in 2008, saw its external debt go over 1000% of GDP and its net interest payments on debts go close to 20% of GDP. Iceland had to be bailed out by the IMF as it faced an economic collapse due to the burden of its external debt.
All the crisis ridden countries had external debt much higher than foreign exchange reserves.
What are levels of external debt ratios to get worried about?
There is no single threshold level of external debt that signals destabilising signs. A research done by BIS (Bank of International Settlement) shows that net external debt higher than 50% of GDP and net interest payments higher than 3% of GDP are levels to worry about. The lower the short term debt to external debt ratio the better as there is less pressure on a country to depend on capital flows to service short term debt. Short term debt at over 50% of total external debt will exert pressure on the country’s ability to service the debt. Foreign exchange reserves should be able to cover a few months of imports as well as repayment of short term debt.
