India’s external debt declined 1.1 per cent to $479.7 billion at end-June 2016 over the previous quarter, primarily on account of a decline in commercial borrowings. (Reuters)

India’s external debt declined 1.1 per cent to $479.7 billion at end-June 2016 over the previous quarter, primarily on account of a decline in commercial borrowings. “At end-June 2016, India’s external debt was placed at $479.7 billion, recording a decline of $5.4 billion over its level at end-March 2016,” a RBI data released today said.

The decline in the magnitude of external debt was partly offset by valuation gains resulting from the appreciation of the US dollar vis-a-vis the rupee and other major currencies.

The external debt to GDP ratio stood at 23.4 per cent as at end-June 2016, a shade lower than its level of 23.7 per cent at end-March 2016.

“Valuation gains due to appreciation of the US dollar against the Indian rupee and other major currencies was placed at $1.4 billion. Excluding the valuation effect, the decline in external debt would have been $4 billion instead of $5.4 billion as at end-June 2016 over the level at end-March 2016,” the central bank said.

Commercial borrowings continued to be the largest component of external debt with a share of 36.6 per cent, followed by NRI deposits (26.3 per cent) and short-term trade credit (16.6 per cent).

At end-June 2016, long-term debt was placed at $397.6 billion, recording a decline of $4.1 billion over its level at end-March 2016. The share of long-term debt in total external debt was marginally higher at 82.9 per cent as at end-June 2016 as compared to its level at end-March 2016.

US dollar denominated debt continued to be the largest component of India’s external debt with a share of 57.1 per cent as at end-June 2016, followed by the Indian rupee (28.6 per cent), SDR (5.9 per cent), Japanese yen (4.8 per cent) and Euro (2.4 per cent).

The share of short-term debt (original maturity) in total debt witnessed a marginal decline over its level at end-March 2016.

The ratio of short-term debt (original maturity) to foreign exchange reserves declined to 22.6 per cent as at end-June 2016 (23.1 per cent at end-March 2016).

India’s external debt statistics for the quarters ending March and June are released by the Reserve Bank with a lag of one quarter and those for the quarters ending September and December by the Ministry of Finance.