India's external debt-to-GDP ratio declined to 18.7 per cent at end-March 2024 from 19.0 per cent at end-March 2023, reflecting a strengthening of the country's macroeconomic fundamentals.
Although, in absolute terms, at the end of March 2024, India's external debt stood at USD 663.8 billion, an increase of USD 39.7 billion over its level at end-March 2023, there was also an increase in the country's GDP due to the high economic growth. This resulted in a decline in the debt-to-GDP ratio.
The RBI data also shows:
The valuation effect due to the appreciation of the US dollar vis-à-vis the Indian rupee and other major currencies such as the yen, euro, and SDR amounted to USD 8.7 billion. Excluding the valuation effect, external debt would have increased by USD 48.4 billion instead of USD 39.7 billion at end-March 2024 over end-March 2023.
Long-term debt
At the end of March 2024, long-term debt (with original maturity of above one year) was placed at USD 541.2 billion, recording an increase of USD 45.6 billion over its level at end-March 2023.
Short-Term debt
The share of short-term debt (with original maturity of up to one year) in total external debt declined to 18.5 per cent at end-March 2024 from 20.6 per cent at end-March 2023. Similarly, the ratio of short-term debt (original maturity) to foreign exchange reserves declined to 19 per cent at end-March 2024 (22.2 per cent at end-March 2023).
Short-term debt on a residual maturity basis constituted 42.9 per cent of total external debt at end-March 2024 (44.0 per cent at end-March 2023) and stood at 44.1 per cent of foreign exchange reserves (47.4 per cent at the end of March 2023).
US dollar-denominated debt
US dollar-denominated debt remained the largest component of India's external debt, with a share of 53.8 per cent at end-March 2024, followed by debt denominated in the Indian rupee (31.5 per cent), yen (5.8 per cent), SDR (5.4 per cent), and euro (2.8 per cent).
Outstanding debt of both government and non-government sectors increased at end of March 2024 over the level a year ago.
The share of outstanding debt of non-financial corporations in total external debt was the highest at 37.4 per cent
Loans remained the largest component of external debt, with a share of 33.4 per cent, followed by currency and deposits (23.3 per cent), trade credit and advances (17.9 per cent) and debt securities (17.3 per cent).
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.
