India's External Debt swells

India's external debt stood at $ 345.8 billion as on April 1, 2012 that increased by 13 per cent as compared with $305.9 billion a year ago, a government status report said adding this was within “manageable” limits.
The rise in India’s external debt by $ 39.9 billion in one year could be attributed to increase in commercial borrowings, short-term debt, and non-resident Indian deposits, the report said.
Longterm external debt at $ 267.6 billion at March-end reflected an increase of 11.1 per cent, while the shortterm debt at $ 78.2 billion increased by 20.3 per cent over a year-ago period. The long-term debt accounted for 77.4 per cent of total external debt at March-end.
The report however said India’s external vulnerability indicators have witnessed some signs of stress in the recent period, reflecting the impact of a deepening eurozone sovereign debt crisis and global slowdown.
Global economic risks could rise further with a weakening recovery, sluggish growth prospects and continuing high debt and gross financing needs in several advanced economies.
Aggravation of external sector risks is reflected in upward movement in India’s current account deficit, falling reserve cover for imports and external debt, depreciating rupee exchange rate, rising levels of external debt and the increasing share of short-term and commercial borrowing in total external debt.
At March-end, the share of commercial borrowings in total external debt stock stood at 30.2 per cent, followed by short-term debt (22.6 per cent), NRI deposits (16.9 per cent) and multilateral debt (14.6 per cent). The rising share of commercial borrowing over the years is an indication of a maturing market economy and the increasing role that the corporate sector is playing in sustaining the growth of the economy. But despite these developments, India's external debt has remained within manageable limits.
This is indicated by the external debt to GDP ratio of 20 per cent and the debt service ratio of 6 per cent in 2011-12.
A cross country comparison also shows that India continues to be among the less vulnerable countries with its external debt indicators comparing well with other indebted countries.
Apart from analysing trend, composition and debt service of India's external debt, the report provides a comparative picture of India's external debt in relation to other developments.
Government (sovereign) external debt stood at $ 81.9 billion at end-March 2012 compared with $ 78.1 billion at end-March 2011. The share of Government external debt in total external debt was lower at 23.7 per cent at end-March 2012 as compared with 25.5 per cent at end-March 2011.
As per the report, the Global Development Finance, 2012 of the World Bank, which contains external debt numbers for 2010, shows that India's position was fifth, in terms of absolute debt stock amongst the top twenty developing debtor countries. In terms of ratio of external debt to Gross National Income, India's position however was the fifth lowest, it said.