Last month, the department of economic affairs in the ministry of finance came out with a status report on India's external debt. As was to be expected, the report evidences significant improvement in the viability of
the external, debt in recent years. Some of the salient features are
as follows:
* The total exterfial debt has remained, around $95 billion for the last five' years, evidencing that the deficit on the current account for1hese years has been financed by non-debt inflows of capital. The 'total debt outstanding at the end of 1998 was $95.7 billion.
* Of the total debt, short-term debt totalled just $3.6 billion, or 3.8 per cent of the total debt However, more on this later.
* The share of official creditors' debt has been falling over the, years, and that of private creditors increasing. Similarly, the proportion of government debt has been coming down and that of non-government, debt increasing.
* The debt service coverage ratio, which was as high as 35 per cent in 1990-91. has been gradually declining and was below 20 per cent in,1997-98 and in the first three quarters of 1998-99-the period covered by the report. Projected debt service payments are fairly stable for the next few years showing a jump only in 2003/04. In our words, as exports of goods and services keep growing, the ratio is likely to come down further. To be sure, the projections of debt service payments suffer from one weakness-they are based on the existing debt and do not include service of fresh debt that may be contracted.
The proportion of external debt on concessional terms has been coming down over the years but was still around 39.3 per cent of the total debt at the
end of December 1998. This proportion is far higher than those of most other: major borrower countries. For a more meaningful comparison of external debt, the report has, therefore, compared the present value of the outstanding debt of different countries to both exports of goods and services, `and' GNP The present value of our external debt is $76.1 billion and just about 150 per cent of current receipts-the amount is also: 21 per cent of the GNP To my mind, even these figures overstate the level of debt.
It will be noticed from the above summary of the report that I have expressed reservations on two counts the level: of short-term debt, and, the Jact that the report does not reflect the country's net external debt.
