External debt rises $15.4 billion to $558.5 billion in March

U.S. dollar-denominated debt remains largest component of the external debt

India’s external debt stood at $558.5 billion in March, an increase of $15.4 billion compared with the year-ago period, according to RBI data.

Commercial borrowings remained the largest component of the external debt, with a share of 39.4%, followed by non-resident deposits at 23.4% and short-term trade credit at 18.2%.

The data showed valuation gains due to the appreciation of the U.S. dollar against the Indian rupee and other major currencies were at $16.6 billion. “Excluding the valuation effect, the increase in external debt would have been $32 billion instead of $15.4 billion at end-March 2020 over end-March 2019,” it said.

At the end of March, long-term debt, with original maturity of above one year, was placed at $451.7 billion, a rise of $17 billion over the level recorded in March 2019.

Short-term debt on residual maturity basis constituted 42.4% of the total external debt and 49.5% of foreign exchange reserves at the end of March.

“U.S. dollar-denominated debt continued to be the largest component of India’s external debt, with a share of 53.7% at end-March 2020, followed by the Indian rupee (31.9%), yen (5.6%), SDR (4.5%) and the euro (3.5%),” the RBI said.

The RBI also said debt service (principal repayments plus interest payments) increased marginally to 6.5% of current receipts at the end of March compared to 6.4% in the same period a year ago. This reflects higher interest payments on commercial borrowings and lower current receipts, it added.

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