India’s external debt rose slightly by 2.1 percent year-on-year to $ 570 billion in March 2021, according to the Treasury Department, despite the COVID19 pandemic.
The external debt ratio increased slightly from 20.6 percent at the end of March 2020 to 21.1 percent.
However, the external debt ratio rose from 85.6 percent in the same period to 101.2 percent, making them the world’s net creditors, according to the released India External Debt Status Report. by the ministry.
Government debt increased 6.2 percent year-on-year to $ 107.2 billion, primarily due to an increase in foreign aid that more than offset the decline in FPI investments in government bonds (GSecs), it said .
The increase in external assistance reflected a higher disbursement of COVID19 loans from multilateral organizations in 202021. In contrast, non-government debt increased 1.2 percent annually to $ 462.8 billion.
Business loans, NRI deposits, and short-term business loans account for 95 percent of non-government debt.
While NRI deposits grew 8.7 percent to $ 141.9 billion, commercial loans were down 0.4 percent to $ 197.0 billion and short-term commercial loans to $ 97.3 billion or 4.1 percent.
As of March 2021, long-term debt (with an original maturity of more than one year) was $ 468.9 billion, an increase of $ 17.3 billion year-over-year. Debt of US $ 4,444 remained the largest component of India’s external debt with a 52.1 percent share as of March 2021, followed by the Indian rupee (33.3 percent), the yen (5 , 8 percent) and SDR (4.4 percent)) and the euro (3.5 percent).
“Over the years, foreign debt policy has given the private sector calibrated access to foreign debt. At the end of March 2021, the amount of non-governmental debt was more than four times greater than the national debt, compared to half at the end of March 1991, ”he said.
Given its relative size, typically in a normal year, it is the relative increase in non-government debt that affects India’s external debt dynamics, thus supplementing domestic savings to finance larger investments as the economy expands. . On the contrary, in the year of the pandemic, the relative increase of the national debt had a greater share in the general growth of the external debt (2.1 percent), he said. This increase is due to COVID19 loans.
On the other hand, within non-governmental debt, growth-sensitive trade credits and import-sensitive short-term trade credits decreased. As a result, the pandemic disrupted growth-related components even as total external debt increased, he added.