India’s debt-GDP ratio dips to 18.7 per cent in March 2024

Mumbai: India’s external debt to GDP ratio declined to 18.7 per cent at end-March 2024 from 19.0 per cent at end-March 2023, reflecting a strengthening of the country’s macroeconomic fundamentals.

Although in absolute terms at the end-March 2024, India’s external debt stood at $663.8 billion, an increase of $39.7 billion over its level at end-March 2023 there was also an increase in the country’s GDP due to the high economic growth. This resulted in a decline in the debt to GDP ratio.

The RBI data also shows:

* Valuation effect due to the appreciation of the US dollar vis-a-vis the Indian rupee and other major currencies such as yen, the euro and SDR amounted to $8.7 billion.

Excluding the valuation effect, external debt would have increased by $48.4 billion instead of $39.7 billion at end-March 2024 over end-March 2023.

* At end-March 2024, long-term debt (with original maturity of above one year) was placed at $541.2 billion, recording an increase of $45.6 billion over its level at end-March 2023.

* The share of short-term debt (with original maturity of up to one year) in total external debt declined to 18.5 per cent at end-March 2024 from 20.6 per cent at end-March 2023.

Similarly, the ratio of short-term debt (original maturity) to foreign exchange reserves declined to 19 per cent at end-March 2024 (22.2 per cent at end-March 2023).