• India’s external debt increased by 8.2 percent year on year to US $ 620.7 billion at the end of March 2022.
• Commercial lenders are the largest creditors, accounting for 36.7 percent of total debt
• Sovereign External Debt (SED), which accounts for 21.1 percent of total external debt

The Department of Economic Affairs stated in a Report that the country’s external debt is sustainable and is being managed prudently. According to the report, India’s external debt is $620.7 billion at the end of March 2022. The debt level is sustainable and is being managed prudently.

India’s external debt increased by 8.2 percent year on year to US $ 620.7 billion at the end of March 2022. Commercial lenders are the largest creditors, accounting for 36.7 percent of total debt outstanding as of the end of March 2022, followed by NRI depositors (22.4 percent), short-term trade creditors (19.6 percent), and multilateral lenders (15.8 percent) (11.7 per cent)

Sovereign External Debt (SED), which accounts for 21.1 percent of total external debt, increased 17.1 percent to US $ 130.8 billion at the end of March 2022, as an increase in additional SDR allocation by the IMF outweighed a decline in FII investments in securities issued by the Government of India (G-sec). Non-sovereign debt, which accounts for 78.9% of total external debt, increased by 6.1% to US $ 490.0 billion as of end-March 2022, as the increase in the stock of short-term trade credit and commercial borrowings was significantly greater than the decline in NRI deposits.

Non-financial corporations were the largest borrowers, with an outstanding debt of US $ 250.2 billion as of end-March 2022, approximately 53% of which was long-term in the form of ECB loans and FPI investments in debt securities.

The US dollar remained the dominant currency of denomination, accounting for 53.2 percent of total external debt as of March 31, 2022.

The debt vulnerability indicators remained benign. The debt service ratio fell significantly to 5.2 percent in 2021-22, down from 8.2 percent the previous year, owing to higher current receipts and lower external debt service payments. The debt service payment obligations arising from the stock of external debt as of the end of March 2022 are expected to decrease in the coming years.

Bonds, loans, trade credits, and deposits, as well as borrower information, are examples of external debt instruments.

In the times of debt crises where many countries are facing challenges in honouring the sovereign obligations, Indian Government is prudently managing its debt to sustainable levels.

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