India’s external debt grew by 8.2% in 2021-22, says finance ministry

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India’s external debt increased by 8.2% to $620.70 billion as of March 31, 2022 from $573.7 billion as of March 31, 2021. However, external debt as a percentage of gross domestic product ( GDP) fell slightly to 19.9% ​​at the end of March. 2022 against 21.2% a year ago, the Union Finance Ministry announced on Monday.

“While 53.2% of this was denominated in US dollars, Indian rupee-denominated debt, estimated at 31.2%, was the second largest,” it said in a statement. Data for 2021-22 was released by the External Debt Management Unit (EDMU) of the Department of Economic Affairs (DEA) of the Ministry of Finance.

External debt as a percentage of GDP “decreased slightly” to 19.9% ​​at the end of March 2022 from 21.2% a year ago, he said. “Foreign exchange reserves as a percentage of external debt were slightly lower at 97.8% at end-March 2022 compared to 100.6% a year ago,” he added.

Long-term debt, estimated at $499.1 billion, made up the largest portion of 80.4%, while short-term debt, at $121.7 billion, made up 19.6% of the total, did he declare. “Short-term trade credit was mainly in the form of trade credit (96%) financing imports,” he added.

Commercial borrowings (COs), NRI deposits, short-term commercial credits and multilateral loans together accounted for 90% of total external debt. While NRI deposits contracted slightly at the end of March 2021 and end of March 2022, CBs, short-term trade credits and multilateral loans, on the other hand, increased during the same period. The rise in CBs, short-term trade credits and multilateral loans was significantly larger than the contraction in NRI deposits, he said.

At the end of March 2022, sovereign external debt (SED) stood at $130.7 billion, up 17.1% from a year ago, reflecting the additional allocation of special drawing rights (SDRs) ) by the International Monetary Fund (IMF) in 2021-22. SDRs fell from $5.5 billion at the end of March 2021 to $22.9 billion. Foreign portfolio investment (REITs) held in government securities (G-Sec), on the other hand, fell to $19.5 billion from $20.4 billion a year ago. , it said.

“Non-sovereign external debt, estimated at $490.0 billion at the end of March 2022, recorded a growth of 6.1% compared to its level a year ago. CBs, NRI deposits, and short-term commercial credit accounted for about 95% of non-sovereign debt. Short-term trade credit increased significantly by 20.7% to $117.4 billion at the end of March 2022 due to an increase in imports in 2021-22,” he added.

The debt service ratio fell to 5.2% in 2021-22 from 8.2% in 2020-21 due to buoyant current receipts and lower debt service payments. Debt service payment obligations arising from outstanding external debt at end-March 2022 are expected to follow a downward trend over the next few years, he added.

“From a cross-country perspective, India’s external debt is modest, ranking 23rd in the world. In terms of various debt vulnerability indicators, India’s sustainability was better than that of low- and middle-income countries (LMICs) as a group and vis-à-vis many of them individually” , he added.

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