India's External Debt Rises To $682.3 Bn In June 2024

India's external debt surged to USD 682.3 billion by the end of June 2024, a 2 per cent increase from March 2024 and an 8.5 per cent rise compared to the previous year, according to data released by the Reserve Bank of India. 

Despite this, the country's external debt-to-GDP ratio remained stable at 18.8 per cent, down slightly from 18.9 per cent in March 2024, signaling that debt levels are being managed effectively in proportion to the nation's economic output.

A key factor contributing to the increase in external debt was the appreciation of the US dollar against the Indian rupee and other major global currencies like the yen, euro, and SDR. This currency movement added USD 3.0 billion to the total debt during the quarter. If not for this valuation effect, the debt increase would have been higher, amounting to USD 16.3 billion instead of USD 13.3 billion during the same period.

India's debt servicing obligations, which include principal and interest payments, showed a slight improvement, standing at 6.6 per cent of current receipts as of June 2024, compared to 6.7 per cent at the end of March 2024. 

Long-term external debt, defined as debt with an original maturity of more than one year, rose by USD 8.2 billion, reaching USD 549.6 billion by June 2024, representing a 1.5 per cent increase. Short-term debt, with a maturity of up to one year, also grew, comprising 19.4 per cent of the total external debt at the end of June, up from 19.1 per cent in March 2024. The ratio of short-term debt to foreign exchange reserves saw a slight uptick, rising to 20.3 per cent from 19.7 per cent in the previous quarter.

The majority of India's external debt remained denominated in US dollars, making up 54.6 per cent of the total. Debt in Indian rupees accounted for 31.2 per cent, followed by yen-denominated debt at 5.4 per cent, SDR at 5.1 per cent, and euro-denominated debt at 2.9 per cent.