India’s external debt rose about 2.4 per cent to $229.9 billion at the end of March 2009 from $224.57 billion a year ago due to rise in trade credit.
The share of short-term debt in the total debt rose to 21.5 per cent at the end of March 2009 from 20.9 per cent at end of March 2008, primarily on account of rise in short-term trade credit, RBI said in a statement.
Analysts said the deepening global financial crisis led to drying of liquidity and forced the central bank to take steps to provide short-term liquidity (mostly export credit).
Excluding the valuation effects due to the appreciation of the US dollar against other major currencies and the rupee, the stock of external debt would have increased by $18.7 billion as compared with the stock at the end of March 2008.
India’s foreign exchange reserves dipped due to rise in trade deficit and large withdrawals from the stock markets by foreign institutional investors.
As a consequence, the cover provided by foreign exchange reserves to the external debt declined to 109.6 per cent at end of March 2009 from 137.9 per cent a year ago.
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The ratio of external debt to Gross Domestic Product (GDP) rose to 22.0 per cent at the end of March 2009 from 19.0 per cent at the end of March 2008.
The debt service ratio, which has declined steadily over the years, stood at 4.6 per cent. India was the fifth most indebted country in 2007.