India’s external debt rose to $614.9 bln at end of December 2021

India’s external debt rose by USD 11.5 billion to USD 614.9 billion in the three months ended December 2021, the finance ministry said on Thursday. The external debt to GDP ratio fell marginally to 20 per cent at the end of December last year from 20.3 per cent at the end of September 2021.

According to India‘s Quarterly External Debt Report for quarter ended December 2021, the country’s external debt was placed at USD 614.9 billion, recording an increase of USD 11.5 billion over its level at the end of September 2021.

“India’s external debt continues to be sustainable and prudently managed,” it said.

Valuation gain due to the appreciation of the US dollar vis-a-vis major currencies such as Euro, Yen and Special Drawing Rights (SDRs) was placed at USD 1.7 billion.

“Excluding the valuation effect, the increase in external debt would have been USD 13.2 billion instead of an increase of USD 11.5 billion at end-December 2021 over end- September 2021,” it said.

Commercial borrowings remained the largest component of external debt, with a share of 36.8 per cent, followed by non-resident deposits (23.1 per cent) and short-term trade credit.

At the end of December 2021, long-term debt, with original maturity of above one year, was placed at USD 500.3 billion, recording an increase of USD 1.7 billion over its level at the end of September 2021.

The share of short-term debt, with original maturity of up to one year, in total external debt increased to 18.6 per cent at the end of December 2021 from 17.4 per cent at end-September 2021.

US dollar denominated debt remained the largest component of India’s external debt, with a share of 52 per cent at end-December 2021, followed by the Indian rupee (32 per cent), SDR (6.7 per cent), Yen (5.3 per cent), and the Euro (3.1 per cent).

“The borrower-wise classification shows that the outstanding external debt of government marginally declined while that of non-government sector increased as at end-December 2021 over the previous quarter,” the report said.

Also, debt service (principal repayments plus interest payments) increased to 4.9 per cent of current receipts at end-December 2021 from 4.7 per cent at end-September 2021.

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