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28th Edition of Status Report on India’s External Debt 2021-22 released

28th Edition of Status Report on India’s External Debt 2021-22 released: Status Report on India’s External Debt 2021-22 has been announced by the External Debt Management Unit (EDMU) of the Department of Economic Affairs, Ministry of Finance. The released report is the 28th edition of the Status Report on India’s External Debt 2021-22. India’s external debt at the end of March 2021 was US$ 573.7 billion which has grown by 8.2 percent and at the end of March 2022, it has risen to US$ 620.7 billion. 53.2 percent of India’s external debt was denominated in the US dollar, and Indian rupee-denominated debt, estimated at 31.2 percent, was the second largest. The sustainability of India was better than the Low-and-Middle Income Countries (LMICs) as a group and vis-à-vis many of them individually while considering various debt vulnerability indicators.

External Debt of India

External debt as a ratio to GDP was 21.2 percent in 2021 and it came down marginally to 19.9 percent at the end of March 2022. Foreign currency reserves as a ratio to external debt were 100.6 percent a year ago and at the end of March 2022 stood slightly lower at 97.8 percent. The long-term debt estimated at US$ 499.1 billion, comprised the largest portion of 80.4 percent, while the short-term debt, at US$ 121.7 billion, accounted for 19.6 percent of the total. 90 percent of the total external debt consisted of Commercial borrowings (CBs), NRIs deposits, short-term trade credit and multilateral loans. The short-term trade credit was mainly in the form of trade credit (96 per cent) financing imports. During the March end 2021 and March end 2022 NRI deposits marginally contracted whereas in the same time period CBs, short-term trade credit and multilateral loans expanded. The increase in CBs, short-term trade credit and multilateral loans together was significantly larger than the contraction in NRI deposits. At the global level India secured 23rd position when its external debt was viewed on a cross-country level and was considered as moderate.

Sovereign External Debt

Sovereign External Debt (SED) has been amounted to US$ 130.7 billion at the end of March 2022 increasing by 17.1 percent over the level a year ago. The increment in the Sovereign External Debt introspects that additional SDRs(Special Drawing Rights) are issued by the IMF during 2021-22. At the end March 2021 SDRs was US$ 5.5 billion which has risen to US$ 22.9 billion. FPI holding of G-Sec, on the other hand has been reduced to US$ 19.5 billion from US$ 20.4 billion which was estimated a year ago.

Non-Sovereign External Debt

Non-sovereign external debt at the end of March 2022 was estimated to be US$ 490.0 billion. In comparison to 2021 Non-Sovereign External Debt recorded a growth of 6.1 percent. 95 percent of Non-Sovereign Debt included CBs, NRI deposits, and short-term trade credit. The short-term trade credit rose significantly by 20.7 per cent to US$ 117.4 billion as at end-March 2022 on the back of a surge in imports during 2021-22.

Debt Service Ratio

Because of buoyancy in current receipts and a decline in debt service payments the debt service ratio has decreased to 5.2 percent during 2021-2022 from 8.2 percent during 2020-2021. Over the coming years the debt service payment obligations arising out of the stock of external debt as at end-March 2022 are expected to experience a downfall.

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