India's external debt rose to $620.7 bn in FY22, up 8% YoY: RBI data

India's external debt increased by USD 47.1 billion to USD 620.7 billion in the financial year ended March 2022, the Reserve Bank said on Thursday.

However, the external debt to GDP ratio declined to 19.9 per cent at the end of March from 21.2 per cent at the end of March 2021.

Valuation gains due to the appreciation of the US dollar as against Indian rupee and major currencies such as yen, euro and SDR were placed at USD 11.7 billion.

"Excluding the valuation effect, external debt would have increased by USD 58.8 billion instead of USD 47.1 billion at end-March 2022 over end-March 2021," Reserve Bank of India (RBI) said in a statement.

At the end of March, long-term debt (with original maturity of above one year) was placed at USD 499.1 billion, recording an increase of USD 26.5 billion over its level at the end of March 2021.

During the same period, the share of short-term debt in total external debt increased to 19.6 per cent from 17.6 per cent.

Similarly, the ratio of short-term debt to foreign exchange reserves increased to 20 per cent at the end of March this year.

Further, RBI said the US dollar-denominated debt remained the largest component of India's external debt, with a share of 53.2 per cent followed by debt denominated in the Indian rupee (31.2 per cent), SDR (6.6 per cent), yen (5.4 per cent), and the euro (2.9 per cent).

In another statement, RBI said net claims of non-residents on India increased by USD 5.6 billion during fourth quarter of 2021-22 to USD 359.8 billion in March 2022.

"This rise in net claims was due to larger decline in the Indian residents' overseas financial assets... when compared to the decline in foreign-owned assets in India...," it said.

Foreign assets of Indian residents declined during the March quarter of 2021-22, mainly due to a decrease of USD 26.3 billion in reserve assets even as direct, portfolio and other investments such as trade credit and currency and deposits increased during the period.

RBI said the decline in the country's foreign liabilities during the quarter is attributed to a reduction in portfolio investment as well as currency and deposits.

Variation in the exchange rate of rupee vis-a-vis other currencies had a significant impact on the change in liabilities, when valued in USD terms, as the rupee depreciated by 2.02 per cent during the quarter.