The country’s external debt stood at USD 349.5 billion as of June 2012, up USD 3.9 billion or 1.1 per cent over March 2012, according to RBI data.
“The increase in total external debt during the quarter was primarily on account of rise in non-resident external rupee denominated deposits, reflecting the impact of deregulation of interest rates in these deposits in December 2011. “There has been sizeable rise in short-term trade credit as well,” RBI said.
The long-term debt at USD 269.1 billion and short-term debt at US 80.5 billion accounted for 77 per cent and 23 per cent, respectively, of the total external debt as of June 2012, the data showed. RBI said mutlilateral debt and external commercial borrowing (ECB) at the end of June 2012 was lower than that of the end of March 2012 on higher repayments during the quarter.
The share of external commercial borrowings (ECB) continued to be the highest at 30 per cent of total external debt, followed by NRI deposits (17.4 per cent) and multilateral debt (14.2 per cent). Short-term debt accounted for 42.9 per cent of the total external debt. Of this, share of NRI deposits was 28.8 per cent. The share of short-term debt in total debt was 23 per cent, RBI said. The ratio of short-term debt to foreign exchange reserves rose to 27.8 per cent as of June from 26.6 per cent in March 2012.
Debt denominated in US dollar remained the highest with a share of 56.3 per cent in total external debt followed by the Indian rupee (21.4 per cent) and Japanese Yen (9.1 per cent). The ratio of foreign exchange reserves to external debt at end June 2012 at 82.9 per cent was lower than the level of March 2012, RBI said. RBI said the current account deficit was largely financed through debt flows with continued uncertainty in the global economy affecting the quantum of equity flows during the first quarter of 2012-13.
Although, widening current account deficit was largely financed through debt flows, rise in magnitude of debt over the preceding quarter has been relatively moderate as a part of the rise was offset by valuation gains. “The valuation gain during the first quarter of 2012-13 amounted to USD 7.9 billion reflecting the appreciation of US dollar against the Indian rupee and other major currencies. Thus excluding the valuation gains the stock of external debt as at June 2012 would have increased by 11.8 billion,” RBI said.
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