Key Facts about India's External Debt

India's external debt stands at US$ 663.8 billion, a $39.7 billion increase from end-March 2023, as reported by the Reserve Bank of India.

India's External Debt Details:

1. External Debt:
   1. End-March 2024: US$ 663.8 billion, up by US$ 39.7 billion from end-March 2023.
2. Debt-to-GDP Ratio:
   1. End-March 2024: 18.7%, down from 19.0% at end-March 2023.
3. Valuation Effect:
   1. US$ 8.7 billion due to the appreciation of the US dollar against the Indian rupee and other major currencies.
      • Valuation effects represent changes in the value of assets held abroad relative to domestic assets held by foreign investors.
      • Excluding the valuation effect, external debt would have increased by US$ 48.4 billion over the same period.
4. Long-Term Debt:
   1. End-March 2024: US$ 541.2 billion, an increase of US$ 45.6 billion from end-March 2023.
5. Short-Term Debt:
   1. End-March 2024: 18.5% of total external debt, down from 20.6% at end-March 2023.
   2. Ratio of short-term debt to foreign exchange reserves decreased to 19.0% at end-March 2024 from 22.2% at end-March 2023.
6. Currency Composition:
   1. US dollar-denominated debt remains the largest component at 53.8%, followed by Indian rupee (31.5%), yen (5.8%), SDR (5.4%), and euro (2.8%).
7. Sectoral Breakdown:
   1. Outstanding debt of both government and non-government sectors increased year-on-year.
   2. Non-financial corporations hold the highest share (37.4%) of outstanding debt, followed by deposit-taking corporations (28.1%), general government (22.4%), and other financial corporations (7.3%).
8. Debt Components:
   1. Loans are the largest component (33.4%), followed by currency and deposits (23.3%), trade credit and advances (17.9%), and debt securities (17.3%).
9. Debt Service:
   1. Debt service (principal repayments and interest payments) rose to 6.7% of current receipts at end-March 2024, up from 5.3% at end-March 2023.

What is Foreign Exchange Reserve?

1. Foreign Exchange Reserves (Forex Reserves) are reserve assets held by a central bank in foreign currencies or assets not denominated in the domestic currency.
2. They include foreign currencies, bonds, treasury bills, and other government securities.
3. Reserves are denominated and expressed in the US dollar, the international numeraire. In India, RBI is the custodian of foreign exchange reserves.

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