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India's External Debt placed at $ 125.2 bn

Written by: Staff
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New Delhi, Sep 11 (UNI) A Finance Ministry status report today put India's external debt stock at 125.2 billion dollars for the period ending March 2006, up from 123.2 billion in the same period last year.

The increase in 2005-06 was around 2 billion dollars as compared to an increase of 11.6 billion dollars in 2004-05. The The lower level of accumulation of external debt in 2005-06 was essentially due to redemption of India Millennium Deposits (IMDs) of 5.5 billion dollars in December 2005.

Component-wise, the increase in debt stock during 2005-06 was mainly due to an escalation in NRI deposits and a surge in short-term credits which were partially offset by contraction in commercial borrowings and bilateral loans.

A status report on India's External Debt is brought out on an annual basis by the Department of Economic Affairs, Ministry of Finance setting out the developments in India's external debt during the year. The Twelfth Status Report released here gives a detailed analysis of the developments in the country's external debt during 2005-06 besides providing data from March 1990 to March 2006. The Report also compares India's external debt and debt indicators with other indebted countries.

External debt indicators have improved from strength to strength during the last few years despite an increase in the volume of debt.

External debt-to-GDP ratio has dropped gradually from 38.7 per cent in 1991-92 to 15.8 per cent in 2005-06. Debt service as a proportion of current receipts (debt service ratio) declined over the years to reach a level of 6.1 per cent (excluding one-off transaction of repayments under IMDs) in 2005-06.

Like-wise, short-term debt to total debt and short-term debt to forex assets have shown gradual improvement. The moderation in debt accumulation and improvement in debt sustainability indicators during the post-reform period essentially reflect committed efforts of the Government to keep external debt within manageable limits.

India's external debt position compares well with that of other indebted countries. India's external debt indicators such as ratios of short-term debt to total debt and short-term debt to forex reserves are the lowest among the top ten debtor countries.

Proportion of concessional loans in total debt is the highest, while debt to Gross National Income and debt service ratios are the second lowest after China for the year 2004.

Among the top ten debtor countries of the world, India has improved her ranking from being third in 1991 to eighth in 2004.

UNI GS RA RK1945

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