The Hindu : Business : External debt up 30.4% at $221.2 b

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Friday, Sep 05, 2008
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External debt up 30.4% at $221.2 b

Special Correspondent

NEW DELHI: India’s external debt surged by 30.4 per cent to $221.2 billion (Rs. 8,84,516 crore) in 2007-08, mainly owing to the rush by corporates to raise cheaper funds abroad following high interest rates on bank credit back home.

According to a status report on the country’s external debt position released by the Finance Ministry here on Thursday, funds raised by India corporates through external commercial borrowings (ECBs) accounted for 28 per cent of the total debt while short-term debt added up to another 20 per cent.

The report noted that the sharp increase in external debt during the fiscal year was owing to a rise in short-term debt to finance increased oil imports at higher prices as also the effect of the depreciation of the U.S. dollar against the rupee. In fact, a weaker dollar against major currencies accounted for nearly 20 per cent of the country’s total foreign debt. The study revealed that debts taken by corporates during the year through ECBs soared by 49 per cent to touch $62.02 billion as on March 31, 2008. The report maintained that despite the increase, the country’s overall external debt position was contained within manageable limits as a result of the Government’s cautious foreign debt policy.

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