Debt
Debt

India's external debt for the quarter ended March 2020 rose to $558.5 billion on account of currency valuation effect, commercial borrowings and non-resident Indian (NRI) deposits, official data showed on Tuesday.

The external debt during the period under review rose by 2.8 per cent or $15.4 billion on a year-on-year basis.

"At end-March 2020, India's external debt was placed at $558.5 billion, recording an increase of $15.4 billion over its level at end-March 2019," the RBI said.

"Valuation gains due to the appreciation of the US dollar vis-a-vis Indian rupee and other major currencies were placed at $16.6 billion. Excluding the valuation effect, the increase in external debt would have been $32 billion instead of $15.4 billion at end-March 2020 over end-March 2019."

On a segment specific basis, commercial borrowings remained the largest component of external debt, with a share of 39.4 per cent, followed by non-resident deposits (23.4 per cent) and short-term trade credit (18.2 per cent).

Besides, the RBI data showed that US dollar denominated debt continued to be the largest component of India's external debt, with a share of 53.7 per cent at end-March 2020, followed by the Indian rupee (31.9 per cent), yen (5.6 per cent), SDR (4.5 per cent) and the euro (3.5 per cent).

"The share of outstanding debt of non-financial corporations in total external debt was the highest at 42 per cent, followed by deposit-taking corporations (except the central bank) (28.3 per cent), general government (18.1 per cent) and other financial corporations (7.5 per cent)," the RBI said.

"The instrument-wise classification shows that the loans were the largest component of external debt, with a share of 34.8 per cent, followed by currency and deposits (24 per cent), trade credit and advances (18.7 per ce nt) and debt securities (17.4 per cent)."

According to M. Govinda Rao, Chief Economic Advisor, Brickwork Ratings: "External debt as a ratio of GDP has shown a marginal increase to 20.6 per cent in 2020 as compared to 19.6 in the previous year."

"The outlook on this front does not look bright as the economy may have to settle down to a lower level equilibrium due to lockdown and restrictions during 2021."

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