India’s external debt augmented by $10.5 billion to $317 billion in the first quarter of current financial year compared to last quarter of 2010-11. This surge in the external debt is mainly due to the increase in commercial borrowing and trade credit. According to the data released by the Reserve Bank of India (RBI), around 70% of the increase in the total external debt in April-June 2011 was on account of the commercial borrowing and short term trade credits broadly showing increase in imports.
The share of commercial borrowings in total external debt had the highest share, it accounted for 29.4% total external borrowing during April quarter, and it was followed by the short-term debt which accounted for 21.6% and non-resident deposits which accounted for 16.7% and multilateral debt was 15.6% of the total external borrowing.
The RBI said the long-term debt at $248.5 billion and short-term debt at $68.5 billion accounted for 78.4% and 21.6%, respectively, of the total external debt as at end-June 2011. The government external debt or Sovereign external debt stood at $78.7 billion in the April quarter from $78.2 billion at the end of March 2011.
As per the standard practice, country’s external debt data for the quarter ending March and June are released by the RBI and for September and December quarter by the Ministry of Finance. The RBI said that excluding the valuation effects due to the depreciation of the US dollar against other major currencies and Indian rupee, the increase in external debt at the end of June worked out to be $9.1 billion over the previous quarter. The ratio of foreign exchange reserves to external debt at the end of June 2011 was 99.6%, almost the same level as at the end of March 2011, the RBI added.
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