Finance Minister Nirmala Sitharaman said India’s external debt was modest in cross-border terms. Total external debt rises by about 1% in 2023-24 to more than $624 billion.
According to the Ministry of Finance report, the current foreign exchange reserves are sufficient to cover about 93% of the total debt. “From a cross-country perspective, India’s external debt is in good shape according to a standard set of debt vulnerability indicators (measured in nominal and current values),” the report said. Notably, as of August 25, foreign exchange reserves were $594.86 billion.
The report highlighted valuation gains of $20.6 billion by the end of March 2023 due to the appreciation of the US dollar against the rupee and other major currencies such as the Japanese yen, SDR and Euro. Excluding valuation effects, external debt would be $26.2 billion higher at end-March 2023 than at end-March 2022, rather than $5.6 billion. External debt-to-GDP ratio fell from 20% to 18.9% by end-March 2023. As of the end of March 2022.
In a foreword to the report, Sitharaman said the debt service ratio of 5.3% was within the comfort range. Long-term debt accounted for 79.4% of total external debt, while short-term debt accounted for 20.6%. She said short-term debt was essentially incurred to finance imports, adding to the stability of total external debt.
total global debt
As of December 2022, the total global debt is $9.32 trillion, while India’s total debt is $613.1 billion, ranking 22nd.ND Location. Sitharaman said that from a cross-border perspective, India’s external debt is small, with long-term debt accounting for 78.9% of total external debt compared to the global average of 58.6%.
“From a cross-country perspective, India’s external debt position is better than that of most low- and middle-income countries, as measured by certain vulnerability indicators such as short-term debt as a share of total external debt, external debt as a share of GNI , foreign exchange reserves and foreign debt, and the relationship between foreign debt and exports,” she said.
Sovereign external debt (SED) accounted for 21.3% of total external debt at the end of March 2023, rising 1.9% to $133.3 billion. Non-SEDs accounted for 78.7 percent of total external debt, an increase of 1.9 percent. As of the end of March 2023, an increase of 0.6% to $491.3 billion. Although SED and non-SED increased in absolute terms by the end of March 2023, they decreased as a percentage of GDP. While strategic economic development fell to 4.0% of GDP from 4.2%, non-strategic economic development fell to 14.8% of GDP by end-March 2022 from 15.8% at end-March 2023.