As per the standard practice, with a lag of one quarter, India's external debt statistics for the quarters ending March and June are released by the Reserve Bank of India 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 2014 in Rupees and US dollar terms as well as revised data for the earlier quarters are set out in Statements 1 and 2, respectively. The major developments relating to India’s external debt as at end-June 2014 are presented in the following paragraphs.

Highlights

With a modest level of current account deficit (CAD) and sharp rise in non-debt creating flows in Q1 of 2014-15, India’s external debt at US$ 450.1 billion rose marginally by 1.8 per cent over end-March 2014. The share of short-term debt in total debt in terms of both original maturity and residual maturity declined further over end-March 2014 as investment of FIIs in Government treasury bills and other instruments showed a decline in Q1 of 2014-15.

The major developments relating to India’s external debt as at end-June 2014 are set out below:

• India’s external debt, as at end-June 2014, was placed at US$ 450.1 billion showing an increase of US$ 7.9 billion or 1.8 per cent over the level at end-March 2014 (Table 1).

• Of the total absolute increase of US$ 7.9 billion in total external debt, a marginal increase of about US$ 0.4 billion during the quarter was on account of valuation change, reflecting a marginal depreciation of the US dollar against the Indian rupee and other major currencies.

• The increase in total external debt was primarily on account of rise in commercial borrowings by US$ 6.3 billion over end-March 2014. Outstanding NRI deposits with a rise of US$ 2.4 billion over end-March 2014 were the second largest source of increase in India’s external debt.

• In terms of major components, the share of commercial borrowings continued to be the highest at 34.2 per cent of total external debt, followed by NRI deposits (23.6 per cent) and short-term debt based on original maturity (19.5 per cent).

• The share of short-term debt in total debt witnessed a decline over the preceding quarter as well as the corresponding quarter of the previous year. Short-term debt at US$ 87.9 billion accounted for 19.5 per cent of the total external debt as at end-June 2014 as compared to 20.2 per cent at end-March 2014.

• With decline in short-term debt, the ratio of short-term debt (original maturity) to foreign exchange reserves declined to 27.8 per cent as at end-June 2014 from 29.3 per cent as at end-March 2014. Similarly, on residual maturity basis, the ratio of short-term debt to foreign exchange reserves worked out to 55.3 per cent at end-June 2014 as compared with 57.4 per cent at end-March 2014 (Table 2).

• The US dollar denominated debt continued to be the largest component of India’s external debt with a share of 61.1 per cent as at end-June 2014, followed by Indian rupee (22.1 per cent), SDR (6.8 per cent), Japanese Yen (4.9 per cent) and Euro (3.1 per cent).

• Government (Sovereign) external debt stood at US$ 85.4 billion as at end-June 2014 as against US$ 81.5 billion as at end-March 2014 (Table 3). The shares of Government and non-Government external debt in the total external debt were 19.0 per cent and 81.0 per cent, respectively, as at end-June 2014.

Ajit Prasad
Assistant General Manager

Press Release : 2014-2015/677