India's external debt rises to 12.9 per cent in FY'13

MUMBAI: India's external debt rose 12.9 % in FY'13 to $ 390 billion on account of a sharp rise in short-term trade credit. There has been sizeable rise in external commercial borrowings (ECBs) and NRI deposits as well, data released by the Reserve Bank of India said.

In terms of major components, the share of external commercial borrowings continued to be the highest at 31.0 per cent of total external debt, followed by short term debt (24.8 per cent) and NRI deposits (18.2 per cent).

The ratio of short-term debt which was seen declining in the late ninties has started rising sharply since the global financial meltdown of 2008.The share of short-term debt in total debt, by original maturity, was 24.8% as of end March . Based on residual maturity, short-term debt accounted for 44.2% of the total external debt as at end-March 2013. Of this, the share of NRI deposits was 28.4 %.

"The rising proportion of short-term debt is clearing disconcerting. More so because much of the increase is concentrated in a few sectors.'' Said Jahangir Aziz chief Asia economist, J P Morgan.

Over the years the external debt scenario has changed significantly from the earlier dependence on aid flows to greater borrowings by corporates.