India's external debt increased US$ 58.4 billion or 12.4% to US$ 529.7 billion end March 2018 over its level at end-March 2017 i.e. during the financial year ended March 2018. An increase in commercial borrowings, short-term debt and non-resident Indian (NRI) deposits primarily led to rise in external debt in last 12 months. The increase in the magnitude of external debt was partly due to valuation loss resulting from the depreciation of the US dollar against major currencies.
The external debt to GDP ratio stood at 20.5% at end-March 2018, higher than its level of 20.0% at end-March 2017.
Valuation loss due to the depreciation of the US dollar against major currencies (viz., euro, SDR, Japanese yen and pound sterling) was placed at US$ 5.2 billion. Excluding the valuation effect, the increase in external debt would have been US$ 53.1 billion instead of US$ 58.4 billion at end-March 2018 over end-March 2017.
Commercial borrowings continued to be the largest component of external debt with a share of 38.2%, followed by NRI deposits (23.8%) and short-term trade credit (19.0%).
At end-March 2018, long-term debt (with original maturity of above one year) was placed at US$ 427.5 billion, recording an increase of US$ 44.3 billion over its level at end-March 2017. The share of long-term debt (original maturity) in total external debt at end-March 2018 was 80.7%, lower than its level of 81.3% at end-March 2017.
The share of short-term debt (with original maturity of up to one year) in total external debt increased to 19.3% at end-March 2018 from 18.7% at end-March 2017. The ratio of short-term debt (original maturity) to foreign exchange reserves increased to 24.1% at end-March 2018 (23.8% at end-March 2017).
Short-term debt on a residual maturity basis (i.e., debt obligations that include long-term debt by original maturity falling due over the next twelve months and short-term debt by original maturity) constituted 42.0% of total external debt at end-March 2018 (41.6% at end-March 2017) and stood at 52.3% of foreign exchange reserves (53.0% at end-March 2017).
US dollar denominated debt continued to be the largest component of India's external debt with a share of 49.5% at end-March 2018, followed by the Indian rupee (35.8%), SDR (5.5%), Japanese yen (4.8%) and euro (3.4%).
The borrower-wise classification shows that the outstanding debt of both government and non-government sectors increased at end-March 2018.
Debt service payments declined to 7.5% of current receipts at end-March 2018 as compared with 8.3% at end-March 2017.