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India's external debt falls 3.6% to $510.4 billion at September-end

01 Jan 2019 Evaluate

India's external debt has witnessed a decline of 3.6 percent to $510.4 billion at September-end over its level at end-March 2018, on account of a decrease in commercial borrowings, short-term debt, non-resident Indian (NRI) deposits and valuation effect. According to the Reserve Bank of India (RBI), the decrease in the magnitude of external debt was mainly due to valuation gains resulting from dollar's strength against Indian rupee and major global currencies overseas. It added that valuation gains due to the appreciation of the dollar vis-a-vis the rupee and major currencies were placed at $25.4 billion.

Excluding the valuation effect, the central bank noted that the increase in external debt would have been $6.1 billion instead of a decrease of $19.3 billion at end-September 2018 over end-March 2018. The debt was $529.7 billion at the end of March 2018.Commercial borrowings continued to be the largest component of external debt with a share of 37.1 percent, followed by NRI deposits (23.9 per cent) and short-term trade credits (19.9 per cent).

As per RBI, at the end of September 2018, long-term debt (with original maturity of above one year) was placed at $406.1 billion, recording a decline of $21.4 billion over its level at the end of March 2018. According to the standard practice, the country's external debt statistics are released with a lag of one quarter. Dollar-denominated debt, with a share of 49.7 percent, continued to be the largest component of India's external debt at September-end, followed by the rupee (36.1 percent), SDR (5.3 percent), the yen (4.7 per cent) and the euro (3.2 percent).

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