Department of Economic Affairs, Ministry of Finance has been publishing 'India's External Debt: A Status Report' on a regular basis since 1993. The current volume of the Report, the fourteenth in the series, brings out developments in India's external debt during 2007-08. It also provides time series data and an analytical presentation of India's external debt statistics since 1990. A cross-country comparison presents India's external debt position in an international perspective.

India's external debt stock at end-March 2008 amounted to US$ 221.2 billion (Rs. 884,516 crore), reflecting an increase of 30.4 per cent over the previous year. Valuation change due to weakening of the US dollar vis-à-vis other major international currencies accounted for almost 20 per cent of the increment in total external debt during the year. In terms of rupees, the increase in India's external debt during 2007-08 was lower at 19.6 per cent due to the appreciation of Indian rupee essentially against the US dollar. The escalation in external debt during the year could be ascribed mainly to rise in external commercial borrowings (39.5 per cent) and short-term debt (34.8 per cent). Between end-March 2007 and end-March 2008, Government debt as a proportion of total external debt declined from 28.4 per cent to 25.6 per cent and as a percentage of GDP, it dropped from 5.3 per cent to 4.8 per cent.

All the major solvency and liquidity indicators of external debt continued to remain in the comfort zone: foreign exchange reserve cover of external debt continued to be at a high level, up from 117.4 per cent during 2006-07 to 140.0 per cent during 2007-08; debt service ratio remained low at 5.4 per cent during 2007-08, though this was marginally higher by 0.6 percentage points over the previous year; other indicators, such as the ratio of external debt to Gross Domestic Product which measures the burden of external debt, was 18.8 per cent during 2007-08; the ratio of short-term debt to foreign exchange reserves stood at 14.3 per cent; and the ratio of short-term debt to total external debt was 20 per cent at end-March 2008.

A cross-country comparison based on the data given in World Bank's 'Global Development Finance, 2008' shows that India's position among the top ten debtor countries of the developing world was fifth in 2006 in terms of the stock of external debt. India's debt service ratio was the second best after that of China. The element of concessionality in India's external debt portfolio was the second highest after that of Indonesia.

"India's External Debt: A Status Report, 2007-2008" has endeavoured to improve the scope and reporting of the debt numbers (especially that of short-term external debt) to make the Report more comprehensive.

The complete Report is available on the website of Ministry of Finance - www.finmin.nic.in.

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BSC/SS/GN-214/08