Driven down by decline in NRI deposits and commercial borrowings, India’s external debt position showed signs of improvements during preceding financial year 2016-2017. As per the latest report released by the Ministry of Finance, the external debt declined by 2.7 per cent or $13.1 billion to $471.9 billion at the end of March 2017, as compared to $485.0 billion at the end of March 2016.
‘India’s External Debt: A Status Report 2016-17’ by Department of Economic Affairs, Ministry of Finance, Government of India, also showed that India's long-term external debt decreased by 4.4 percent year-on-year to $383.9 billion at end-March 2017, while short-term external debt increased by 5.5 percent year-on-year to $88 billion at end-March 2017 on account of increase in trade related credits, which account for 98.3 per cent of short-term debt.
The report further said that the country’s external debt has remained within manageable limits and the external debt situation has improved in 2016-17 over 2015-16 as indicated by the increase in foreign exchange reserves cover to debt to 78.4 per cent from 74.3 per cent and fall in the external debt-GDP ratio to 20.2 per cent from 23.5 per cent. The report further showed the ratio of India’s external debt stock to gross national income (GNI) at 23.4 per cent was the fifth lowest and in terms of the cover provided by foreign exchange reserves to external debt, while India’s position was sixth highest at 69.7 per cent in 2015.