External debt increases by nearly 3% to reach $ 559 billion at the end of March

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Private sector debt rises 4.2% to $ 457.7 billion, four times sovereign debt of $ 100.9 billion

India’s total external debt rose 2.8 percent to $ 558.5 billion at the end of March, mainly due to an increase in commercial borrowing, according to a finance ministry report. External debt stood at $ 543 billion a year earlier.

The ratio of foreign exchange reserves to external finance debt stood at 85.5% at the end of March, compared to 76% in March 2019.

External debt as a percentage of GDP edged up to 20.6 percent from 19.8 percent, according to “India’s External Debt: Status Report: 2019-2020”.

Sovereign debt fell 3% to $ 100.9 billion, the ministry said, adding that the decline was mainly due to a drop in investment by IFIs in G-Secs – the second largest constituent – by 23 , 3% to $ 21.6 billion, compared to $ 28.3 billion in 2019.

Foreign aid loans from multilateral and bilateral sources – the main component of sovereign debt – increased 4.9 percent to $ 87.2 billion. Non-sovereign debt, on the other hand, rose 4.2% to $ 457.7 billion, mainly due to an increase in commercial borrowing – the largest component – from 6.7% to $ 220.3 billion.

The stock of NRI deposits – the second largest constituent – at $ 130.6 billion was almost equal to the level of the previous year.

Non-financial corporations accounted for 42% of total debt.

Capital gains

Noting that the US dollar is the predominant currency for the denomination of India’s external debt with a share of 53.7%, the appreciation of the dollar on March 31 resulted in a capital gain of $ 16.6 billion .

Excluding capital gains, the increase in external debt would have been $ 32 billion.

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