According to the information provided by the Reserve Bank of India (RBI), India is under extreme foreign debt crisis.
On Saturday, it was reported that India's external debt rose by 7.6 per cent to $440.6 billion in 2013-14 mainly due to rise in deposits by non-resident Indians (NRI), the Reserve Bank of India said on Friday.
India's external debt stood at $390 billion in the previous financial year.
The stock of NRI deposits in India's external debt has risen substantially recently.
It further said that India's external debt has remained within manageable limits as indicated by the external debt-GDP ratio of 23.3 per cent and debt service ratio of 5.9 per cent during 2013-14.
Early this year in March, it was reported that India's external debt was at $426 billion - including the government's debt of $76.4 billion - at the end of December.
"Government (Sovereign) external debt stood at $76.4 billion, (17.9 per cent of total external debt) at end- December 2013 as against $81.7 billion (20.2 per cent) at end-March 2013," the Finance Ministry had said.
"The share of US dollar denominated debt was the highest in external debt stock and stood at 63.6 per cent at end- December 2013, followed by debt denominated in Indian rupee (19.4 per cent), SDR (7.1 per cent), Japanese yen (5.0 per cent) and Euro (3.1 per cent)," it added.
India's foreign exchange reserves provided 69 per cent cover to the total external debt as of December end, as against 72.1 per cent as of March-end, 2013.
"India's external debt has remained within manageable limits due to prudent external debt management policy of the Government of India," it had said.
Foreign Investment important for India
Economists believe that India' will have to increase its import to reduce its external debt.
Dr Ram Singh of the Economice department of Delhi University told OneIndia that the India's foreign debt can be reduced if there is quick increase in the foreign investment.
Due to the long term debt, there has been an increase in the foreign debt.
India's external debt, as at end-March 2014, was placed at US$ 440.6 billion showing an increase of US$ 31.2 billion or 7.6 per cent over the level at end-March 2013.
US dollar denominated debt continued to be the largest component of India's external debt with a share of 61.8 per cent as at end-March 2014, followed by Indian rupee (21.1 per cent), SDR (6.9 per cent), Japanese Yen (5.1 per cent) and Euro (3.4 per cent).
How will common man be benefited?
If India manages to get rid of the external debt, then the Indian government will exempt many taxes.
The government would be able to introduce various schemes, that will help in improving the financial situation of the Indians.
The dreams of buying a home and owning a car would be reality for many.