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The Status Report on India’s External Debt 2021-22, issued by the Ministry of Finance’s Bureau of Economic Affairs, has reached its 28th edition. From the end of March 2021 to the end of March 2022, India’s external debt climbed by 8.2 % to US$ 620.7 billion. 53.2 % of it was projected to be in US dollars, and 31.2 % was anticipated to be in Indian rupees.
Table of Contents
- 28th Status Report on India’s External Debt 2021-22 released
- External debt as a ratio to GDP fell marginally.
- Short-term trade credit & multilateral loans account for 90% of external debt.
- Non-sovereign external debt, estimated at US $ 490.0 billion
- India’s external debt is modest, at the 23rd position globally
Key takeaways
- Even though 53% of it was in US dollars, its Indian rupee debt was predicted to be 31.2 %, as per the figures.
- According to finance ministry figures, India’s external debt amounted to US$ 620 billion after March 2022, up 8.2 % from US$ 573.7 billion at the end of March 2021.
- The 28th edition of the Report Card on India’s External Debt 2021-22 has been issued by the outside Debt Consolidation Unit (EDMU) of the Ministry of Finance’s Department of Economic Affairs.
- Even though 53.2 % of it was issued in dollars, overall Indian rupee debt was predicted to be 31.2 %, according to the figures.
28th Status Report on India's External Debt 2021-22 released
From the end of March 2021 to the end of March 2022, India’s external debt climbed by 8 % to US$ 620.7 billion. Although 53.2 % of it was projected to be in US currency, 31 % was anticipated to be in Indian rupees.
Overseas as a share of GDP declined to 19.9% at the end of 2022, from 21.2 % in the previous year. By the end of March 2022, forex reserves as a %age of foreign debt had fallen to 97.8 %, up from 100 % the previous year. 5 The long-term debt, worth $499 billion, accounted for 80.4% of the total, while the brief debt, at $121.7 billion, stood for 19.6%. Short-term trade finance was mostly used to support imports through trade credit (96%).
Corporate borrowings (CBS), NRIs, short lines of credit, and multilateral loans accounted for 90% of total external debt. While NRI accounts declined somewhat between March 2020 and March 2022, CBS, short lines of credit, and multilateral lending grew. CBS, short trade credit, and overseas loans grew considerably faster than NRI deposits.
SED remained at US$ 130 billion at the end of March 2022, up 17% from the previous year, reflecting an increased distribution of SDRs by the IMF during 2021-22. SDRs grew from 5.5 billion USD at the end of March 2021 to a 23billion USD. FPI holdings in G-Sec, on the other hand, fell to $19and half billion from $20 million the previous year.
Due to an increase in current collections and a decrease in debt service payments, the debt service ratio declined to 5 % in 2021-22 from 8 % in 2020-21. Monthly debt payment obligations originating from the stock of international debt for the rest of March 2022 are expected to decline in the next years. In comparison, India’s foreign debt is minimal, placing 23rd in the world. India excelled in the resources available to support as a group, and some of them individually on key debt risk metrics.
External debt as a ratio to GDP fell marginally
External total debt as a proportion of GDP fell to 19.9 % in the fourth quarter of March 2022, from 12.4 % the previous year. Foreign reserves as a %age of foreign debt were 96 % at the end of March 2022, down from 100.6 % the previous year.
The long-term debt, valued at 499.1 billion, accounted for 80.4 % of the total, whereas the quick debt, valued at 121 billion, accounted for 19 %. Most short-term trade finances took the form of credit (96%), which was employed to support imports.
Short-term trade credit & multilateral loans account for 90% of external debt
Commercial borrowings (CBS), NRI deposits, relatively brief trade credit, and multilateral loans accounted for 90% of total external debt. While NRI deposits fell somewhat between the end of March 2021 and the end of March 2022, CBS, rapid trade credit, & multilateral loans increased. The growth in CBS, rapid trade credit, and multinational loans were substantially bigger than the reduction in NRI deposits.
SED remained at US$ 130.7 billion as of March 2022, up 17% from the previous year, reflecting an increased distribution of SDRs by the IMF during 2021-22. SDRs increased from billion USD to 22 billion USD at the end of March 2021. FPI investments in G-Sec, in contrast, fell from US$ 19 billion to US$ 20 million in the previous year.
Non-sovereign external debt, estimated at US $ 490.0 billion
Non-sovereign foreign debt is predicted to reach $ 490.0 billion at the end of March 2022, representing an increase of 6% over the previous year. Non-sovereign debt was almost entirely composed of CBS, NRI loans, and short-term trade loans. Short-term trade credit increased by 20 % to US 117 billion at the end of March 2022, owing to increased imports during 2021-22.
The debt-to-debt ratio declined to 5 % in 2021-22 from 8 % in 2020-21 due to higher current revenues and lower commitments. The current debt payment demands resulting from the inventory of foreign debt as of the end of 2022 are expected to diminish in the next few years.
India's external debt is modest, at the 23rd position globally
In global terms, India’s foreign debt is low, ranking 23rd. On many debt risk criteria, India beat other Low-Income Countries (LMICs) as a group and some of them individually.
