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India's External Debt at $230B

RBI’s statement on India’s external debt provides interesting statistics.

At $229.9 Billion, the total external debt remains flat from $224.6B last year. Of this, NRI deposits are $42B, ECBs are $62B, long term govt borrowing is $54B and other short term debt is $49B.

ECB has been flat from last year – it has been a tough year to borrow abroad, I assume.

Sovereign Debt has come down – from $57B down to $54.6B this year. This is interesting – the amount makes for about 250K cr., which is about 6% of GDP. Most of this is loans – less than $1B in bonds really – which must be a pain. Why don’t we let foreigners buy our bonds instead (there’s a cap right now)? It might be our mentality of wanting to control the dollar-rupee equation – since secondary market transactions in the bond market can cause flows in or out, thus affecting the exchange rate. To me though, it seems very short-term thinking; a vibrant market in forex and bonds will ensure such flows will even themselves out, and reduce long term borrowing cost for the government, allowing repurchases in good times. (Loan pre-payments on the other hand cost a great deal in terms of penalties)

A comparison of the world external debt shows India is relatively an infant; Denmark’s external debt at 583B, for instance, is twice that of India. Convertibility must be the factor here – most developed countries have higher external debt. Within the BRIC countries (Brazil, Russia, India, China), India’s external debt is the lowest.

And the rupee’s fall in the last year means the total external debt has gone to 22% of GDP (from 19%) despite staying relatively flat in absolute terms. Nowhere close to a big deal really – most developed countries seem to have it closer to 100% of their GDP.

(Why do I care? This is boring number stuff, I know. It’s just forming a base for a larger understanding of the economic universe – I’m horribly new at it and am trying to get a handle from various news points. )

  • maurya says:

    >Deepak,
    Considering out low debt levels, any idea why our INR is not appreciating.

  • abhikush says:

    >Deepak,

    I think when you talk about 100% levels in the developed world you mean the total public debt and not just external debt.

    I am not sure if there is really a difference but total debt should include external + internal