CURRENT AFFAIRS
CURRENT AFFAIRS
Description
By the end of December 2024, India’s external debt had climbed to approximately $718 billion, reflecting a 10.7% rise compared to the previous year. This growth was primarily fueled by non-financial corporations securing funds for infrastructure development. Both short-term and long-term debt saw notable increases.
Rising External Debt
India’s external debt expanded from around $648 billion in December 2023 to $718 billion a year later, marking an increase of over $69 billion. This growth persisted even as government debt saw a reduction. The external debt-to-GDP ratio stood at 19.1%, slightly higher than the 19% recorded in September 2024.
Breakdown Of External Debt
The majority of India’s external debt is denominated in US dollars, which make up 54.8% of the total. Other significant currency holdings include:
Indian Rupee: 30.6%
Japanese Yen: 6.1%
Special Drawing Rights (SDR): 4.7%
Euro: 3%
Loans remain the largest category, comprising 33.6% of total external debt.
Short-Term vs Long-Term Debt Trends
Debt with a maturity of more than one year, classified as long-term debt, rose to over $578 billion. Meanwhile, short-term debt increased to 19.4% of total external debt, up from 18.9% in the previous quarter, indicating a growing preference for short-term borrowing.
Effect Of Currency Fluctuations
The strengthening of the US dollar against the Indian Rupee and other major currencies resulted in a valuation impact of $12.7 billion. Without this currency fluctuation, the net rise in external debt would have been $17.9 billion instead of $5.2 billion.
Sectoral Debt Distribution
The largest portion of external debt is held by non-financial corporations, accounting for 36.5% of the total. Other key sectors include:
Deposit-taking corporations: 27.8%
General government: 22.1%
Other financial institutions: 8.7%
Debt Servicing And Repayments
The debt service ratio, which includes both principal and interest payments, was recorded at 6.6% of current receipts by the end of December 2024. This represents a slight decline from the 6.7% reported in September 2024, signaling a stable capacity for meeting repayment obligations.
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