India’s external debt to GDP ratio decreased to 18.7% at the end of March 2024 from 19.0% at the end of March 2023, indicating a strengthening of the country’s macroeconomic fundamentals.
In absolute terms, India's external debt stood at $663.8 billion at the end of March 2024, an increase of $39.7 billion over the previous year. The rise in GDP due to robust economic growth contributed to the decline in the debt-to-GDP ratio.
According to data from the Reserve Bank of India (RBI), the valuation effect, driven by the appreciation of the US dollar against the Indian rupee and other major currencies such as the yen, the euro, and the SDR, amounted to $8.7 billion. Excluding this valuation effect, the external debt would have increased by $48.4 billion instead of $39.7 billion.
At the end of March 2024, long-term debt (with an original maturity of over one year) was $541.2 billion, an increase of $45.6 billion from March 2023. The share of short-term debt (with an original maturity of up to one year) in total external debt declined to 18.5% from 20.6% in the same period.
The ratio of short-term debt (original maturity) to foreign exchange reserves also decreased to 19% at the end of March 2024 from 22.2% a year earlier. On a residual maturity basis, short-term debt constituted 42.9% of total external debt at the end of March 2024, down from 44.0% in March 2023, and stood at 44.1% of foreign exchange reserves, compared to 47.4% a year earlier.
US dollar-denominated debt remained the largest component of India’s external debt, accounting for 53.8% at the end of March 2024. This was followed by debt denominated in the Indian rupee (31.5%), yen (5.8%), SDR (5.4%), and euro (2.8%).
Both government and non-government sectors saw an increase in outstanding debt at the end of March 2024 compared to the previous year. Non-financial corporations held the highest share of total external debt at 37.4%.
Loans were the largest component of external debt, with a share of 33.4%, followed by currency and deposits (23.3%), trade credit and advances (17.9%), and debt securities (17.3%).
Debt service, which includes principal repayments and interest payments, increased to 6.7% of current receipts at the end of March 2024 from 5.3% at the end of March 2023, reflecting higher debt service obligations.