The Hindu : External debt rises to $105 b

Online edition of India's National Newspaper
Friday, Jun 20, 2003

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External debt rises to $105 b

By Our Special Correspondent

NEW DELHI JUNE 19 . India's external debt reached a high of $105 billion at the end of December 2002 against $98.8 billion at March 2002. Despite this increase, however, external debt indicators have progressively improved, both in terms of debt to gross domestic product (GDP) and debt-service ratios.

A status report on the country's external debt issued by the Union Finance Ministry today shows that debt to GDP ratio declined from 38.7 per cent at the end of March 1992 to 20.6 per cent at the end of December 2002.

During the same period, debt servicing as a percentage of current receipts declined from 30.2 per cent to 13.7 per cent. Some other crucial parameters such as short-term debt to total debt and short-term debt to foreign exchange assets have also improved substantially over time, the report states.

India's position in terms of indebtedness classification has also improved with the World Bank categorising India as a less indebted country since 1999. Among the top 15 debtor nations of the world, India improved its rank from the third largest debtor after Brazil and Mexico in 1991 to ninth in 2001 after Brazil, China, Mexico, the Russian Federation, Argentina, Indonesia, Turkey and Korea. Among the top 15 debtor nations, India's external debt indicators such as short term debt to total debt and short term debt to forex reserves are lowest and concessional to total debt ratio is the highest while debt to gross national product (GNP) ratio is the second lowest after China in 2001. Another factor brought out in the report shows that external debt stock on total Government debt has improved from $46.5 billion at end of March 1998 to $45.8 billion at the end of December 2002. Contingent liability of the Government has also reduced from $7.3 billion at the end of March 1998 to $6.4 billion at the end of December 2002.

Also, with buoyancy in foreign exchange reserves and the prevailing low level of interest rates both in the domestic and international markets, the Government has encouraged the corporate sector and public sector undertakings to prematurely retire the high cost loans to the extent of $1.14 billion during 2002-03.

Besides, the Government itself, taking advantage of the comfortable reserves position and low interest rates, has prematurely repaid sovereign loans amounting to $1.68 billion owed to the World Bank and $1.34 billion owed to the ADB during February 2003.

The Government has also prepaid Euro 124.05 million out of the hard portion of French bilateral assistance during 2002-03.

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