External debt jumps 30.4% to $221 bn in FY08
Country's external debt rose 30.4% to $221.2 billion in the fiscal year ended March 31, 2008 on account of high overseas corporate borrowings and depreciation of the dollar against major international currencies.
By ET Bureau |
NEW DELHI: Country's external debt rose 30.4% to $221.2 billion in the fiscal year ended March 31, 2008 on account of high overseas corporate borrowings and depreciation of the dollar against major international currencies. During the fiscal, overseas borrowings by companies went up by 39.5%. Importantly, short-term borrowings were up 34.8%, the finance ministry said here on Wednesday.
The weakening of the dollar accounted for around 20% of the total increase in external debt. However, with the appreciation of rupee against the dollar in 2007-08, the increase in external debt in rupee terms was lower at 19.6%.
Because of larger borrowing by corporates, government���s debt as a proportion of total external debt declined from 28.4% to 25.6%. As a percentage of gross domestic product (GDP), sovereign debt dropped from 5.3% to 4.8%.
The government said that external debt was in the comfort zone with the foreign exchange cover of the debt increased to 140% during the last fiscal from 117.4% a year-ago. Debt service ratio, which indicates the ability to meet interest and repayment obligation, was placed at a comfortable 5.4% during 2007-08, though this was marginally higher by 0.6% percentage points over the previous year.
The ratio of external debt to GDP, which indicates the indebtedness of a country, was 18.8% during 2007-08. However, the increase in short-term debt caused most of the related measures of debt sustainability to go up. The ratio of short-term debt to foreign exchange reserves stood at 14.3% at the end of the year against 13.2% at the end of March 2007. The ratio of short-term debt to total external debt was 20% at the end of March this year against 15.5% in the year before. The government also said, quoting a 2008 World Bank report, that India���s debt service ratio was the second best after China.
The weakening of the dollar accounted for around 20% of the total increase in external debt. However, with the appreciation of rupee against the dollar in 2007-08, the increase in external debt in rupee terms was lower at 19.6%.
Because of larger borrowing by corporates, government���s debt as a proportion of total external debt declined from 28.4% to 25.6%. As a percentage of gross domestic product (GDP), sovereign debt dropped from 5.3% to 4.8%.
The government said that external debt was in the comfort zone with the foreign exchange cover of the debt increased to 140% during the last fiscal from 117.4% a year-ago. Debt service ratio, which indicates the ability to meet interest and repayment obligation, was placed at a comfortable 5.4% during 2007-08, though this was marginally higher by 0.6% percentage points over the previous year.
The ratio of external debt to GDP, which indicates the indebtedness of a country, was 18.8% during 2007-08. However, the increase in short-term debt caused most of the related measures of debt sustainability to go up. The ratio of short-term debt to foreign exchange reserves stood at 14.3% at the end of the year against 13.2% at the end of March 2007. The ratio of short-term debt to total external debt was 20% at the end of March this year against 15.5% in the year before. The government also said, quoting a 2008 World Bank report, that India���s debt service ratio was the second best after China.
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