India’s External Debt Reaches $624.7 Billion at End-March 2023: According to Reserve Bank data, India’s external debt has increased slightly, reaching USD 624.7 billion at the end of March 2023. During the same time span, however, the debt-to-GDP ratio has decreased. Valuation gains resulting from the appreciation of the US dollar against major currencies, including the Indian rupee, yen, SDR, and euro, amounted to USD 20.6 billion.
External Debt Growth and Debt-to-GDP Ratio:
The external debt of India rose by USD 5.6 billion compared to the previous year, when it stood at USD 619.1 billion as of March 2022. According to Reserve Bank data, the debt-to-GDP ratio fell from 20% in March 2022 to 18.9% in March 2023.
Valuation Effects on Debt Calculation:
Valuation gains due to the appreciation of the US dollar against major currencies accounted for USD 20.6 billion. If the valuation effect is excluded, the external debt would have increased by USD 26.2 billion instead of USD 5.6 billion from March 2022 to March 2023.
Composition of External Debt:
Long-term debt (with an original duration of more than one year) stood at USD 496.3 billion in March 2023, a 1.1 billion decrease from March 2022. Short-term debt (with an original duration of up to one year) increased its share of total foreign debt from 19.7 percent in March 2022 to 20.6 percent in March 2023.
The ratio of short-term debt (original maturity) to foreign exchange reserves also increased from 20 percent in March 2022 to 22.2 percent in March 2023. The largest component of India’s external debt remained the US dollar-denominated debt, accounting for 54.6 percent, followed by debt denominated in the Indian rupee (29.8 percent), SDR (6.1 percent), yen (5.7 percent), and the euro (3.2 percent).
Components of External Debt:
Loans constituted the largest component of India’s external debt, with a share of 32.5 percent, followed by currency and deposits (22.6 percent) and trade credit and advances (19.9 percent). Debt securities also accounted for a portion of the external debt.
Debt Service:
Debt service, which includes principal repayments and interest payments, slightly increased to 5.3 percent of current receipts by the end of March 2023, compared to 5.2 percent in March 2022. This reflects higher debt service obligations.
