India's external debt outstanding at the end of December 2007 was US$ 201.4 billion (Rs.794,017 crore), reflecting a rise of US$ 10.3 billion over the quarter. As compared to the level of US$ 169.7 billion at end-March 2007, India's external debt at end-December 2007 increased by US$ 31.8 billion. Valuation change, due to the depreciation of US dollar vis-a-vis major international currencies and Indian Rupees, accounted for US$ 1.1 billion of the increase during the quarter and US$ 6.0 billion during April-December 2007. The increase in external debt was mainly brought about by commercial borrowing and short-term debt.

Based on original maturity, long-term debt accounted for 82.6 per cent and short-term debt comprised 17.4 per cent. Long-term debt rose by US$ 6.3 billion to US$ 166.2 billion and short-term debt by US$ 4 billion to US$ 35.2 billion over the quarter. Amongst the components of long-term debt, commercial borrowing increased by US$ 4.9 billion (9.4 per cent) to US$ 57 billion. While NRI deposits declined by 1.5 per cent (US$ 0.6 billion) to US$ 43 billion, multilateral debt, bilateral debt and export credit increased marginally to reach US$ 37.9 billion, US$ 17.3 billion and US$ 8.9 billion, respectively, at end-December 2007. Rupee debt continued to remain around the level of US$ 2 billion. Under short-term debt, while trade related credits rose by around US$ 4 billion, FII debt investment in Government papers rose by US$ 262 million over the quarter.

In the endeavour to improve the analytical content of the report, the external debt stock at end-December 2007 is provided in terms of residual maturity as well, for the first time in the quarterly debt data release. Based on residual maturity, long-term debt accounted for 64 per cent of total debt at end-December 2007. Short-term debt by residual maturity, consisting of principal repayments due during a one-year reference period under medium and long-term loans, and short-term debt with original maturity of one year or less, accounted for 36 per cent of the total external debt.

The share of government debt in total external debt stood at 26.3 per cent (US$ 53 billion). Correspondingly, the share of non-Government (private) debt was 73.7 per cent (US$ 148.5 billion).

At end-December 2007, India's foreign exchange reserves which include foreign currency assets of the Reserve Bank of India, gold, SDRs and Reserve Tranche Position in the International Monetary Fund (IMF) stood at US$ 275.3 billion, providing a cover of 137 per cent to total external debt, while the foreign currency assets of the RBI at US$ 266.6 billion provided a cover of 132 per cent.

The share of US dollar in India's external debt portfolio has showed an increasing trend over the last few years. It further increased to 54.5 per cent at end-December 2007 from 52 per cent at end-March 2007.

External debt composition shift: rise driven by commercial and short term borrowing, increasing private share and dollar exposure. India's external debt rose during the quarter to end December 2007, driven mainly by commercial borrowing and increased short term debt; valuation effects from currency movements also contributed. A residual maturity breakdown, provided for the first time, shows a significant proportion of liabilities maturing within one year. Private sector debt accounts for the larger share of external liabilities while government debt is a smaller component. Foreign exchange reserves provide substantial coverage of total external debt and the US dollar's share in the debt portfolio has increased, signalling greater currency exposure.