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India's external debt rises to $557.4 billion in Q1FY20

01 Oct 2019 Evaluate

Reserve Bank of India (RBI) has said that India’s external debt stood at $557.4 billion in Q1 (April-June) of 2019-20, recording an increase of $14.1 billion over the quarter ended March 2019. Valuation losses due to the depreciation of the US dollar against the rupee and other major currencies were placed at $1.7 billion. Excluding the valuation effect, the increase in external debt would have been $ 12.4 billion instead of $ 14.1 billion at end-June 2019 over end-March 2019.

Commercial borrowings remained the largest component of external debt, with a share of 38.4 percent, followed by non-resident deposits (24 percent) and short-term trade credit (18.7 percent). At end-June 2019, long-term debt (with original maturity of above one year) was placed at $ 447.7 billion, recording an increase of $ 12.8 billion over its level at end-March 2019. The share of short-term debt (with original maturity of up to one year) in total external debt declined to 19.7 percent at end-June 2019 from 20 percent at end-March 2019.

The ratio of short-term debt to foreign exchange reserves declined to 25.5 percent at end-June 2019 as against 26.3 percent at end-March 2019. US dollar-denominated debt continued to be the largest component of the country's external debt, with a share of 51.5 percent at end-June 2019, followed by the rupee (34.7 percent), yen (5.1 percent), SDR (4.7 percent) and the euro (3.2 percent). The borrower-wise classification shows that the outstanding debt of both government and non-government sectors increased at end-June 2019. Debt service declined to 5.8 percent of current receipts at end-June 2019 as compared with 6.4 percent at end-March 2019, reflecting lower repayments of commercial borrowings.

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