As per the standard practice, India's external debt statistics for the quarters ending March and June are released by the Reserve Bank of India with a lag of one quarter and those for the quarters ending September and December by the Ministry of Finance, Government of India. The external debt data as at end-June 2016 in rupees and US dollars as well as revised data for earlier quarters are set out in Statements 1 and 2, respectively. The major developments relating to India’s external debt as at end-June 2016 are presented below.

Highlights

At end-June 2016, India’s external debt witnessed a decline of 1.1 per cent over its level at end-March 2016, primarily on account of a decline in commercial borrowings. The decline in the magnitude of external debt was partly due to valuation gains resulting from the appreciation of the US dollar vis-a-vis the Indian rupee and other major currencies. The external debt to GDP ratio stood at 23.4 per cent as at end-June 2016, a shade lower than its level of 23.7 per cent at end-March 2016.

Major highlights pertaining to India’s external debt as at end-June 2016 are presented below:

• At end-June 2016, India’s external debt was placed at US$ 479.7 billion, recording a decline of US$ 5.4 billion over its level at end-March 2016 (Table 1).

• Valuation gains due to appreciation of the US dollar against the Indian rupee and other major currencies was placed at US$ 1.4 billion. Excluding the valuation effect, the decline in external debt would have been US$ 4.0 billion instead of US$ 5.4 billion as at end-June 2016 over the level at end-March 2016.

• Commercial borrowings continued to be the largest component of external debt with a share of 36.6 per cent, followed by NRI deposits (26.3 per cent) and short-term trade credit (16.6 per cent).

• At end-June 2016, long-term debt was placed at US$ 397.6 billion, recording a decline of US$ 4.1 billion over its level at end-March 2016. The share of long-term debt in total external debt was marginally higher at 82.9 per cent as at end-June 2016 as compared to its level at end-March 2016.

• The share of short-term debt (original maturity) in total debt witnessed a marginal decline over its level at end-March 2016. The ratio of short-term debt (original maturity) to foreign exchange reserves declined to 22.6 per cent as at end-June 2016 (23.1 per cent at end-March 2016).

• On a residual maturity basis, short-term debt constituted 42.4 per cent of total external debt at end-June 2016 (42.6 per cent at end-March 2016) and stood at 55.9 per cent of total foreign exchange reserves (57.4 per cent at end-March 2016) (Table 2).

• US dollar denominated debt continued to be the largest component of India’s external debt with a share of 57.1 per cent as at end-June 2016, followed by the Indian rupee (28.6 per cent), SDR (5.9 per cent), Japanese yen (4.8 per cent) and Euro (2.4 per cent).

• The borrower classification shows that the outstanding debt of the Government increased; however, non-Government debt declined at end-June 2016 (Table 3).

• Debt service payments declined to 7.5 per cent of current receipts as at end-June 2016 as compared with 8.8 per cent at end-March 2016 (Table 4).

Ajit Prasad
Assistant Adviser

Press Release : 2016-2017/824