The Reserve Bank of India (RBI's) latest edition of the report on external debt has flagged the disturbing trend in the country's external indebtedness. In this connection, I would like to recall the experience during the Gulf Crisis of the early 1990s when external debt, especially of short duration, was at an unsustainable level. One of the major problems then was the differing estimates of its extent. The figures of the RBI and the government did not agree; on top of that were the various estimates floated by international organisations such as the World Bank. Governor Venkitaramanan appointed a two-man group called "Policy Group on External Debt Statistics of India" in December 1991 to reconcile the data and formulate a scheme to put them on a reliable basis. It included Y Venugopal Reddy, then joint secretary in the finance ministry, and me as adviser (international finance) in the bank. The group was assisted by a task force of officers of the bank and the finance ministry who visited various institutions and undertook a detailed examination of the accounts. The report was able to explain the differences. One important recommendation was that there should be regular interaction with international agencies to ensure the correct reporting of data. It does not seem to have been followed up. The bank should implement the suggestion and include in its report the estimates of debt according to various national and international sources and the rationale, if any, for differences. To come to grips with the problem of servicing the debt, we need to have firm and reliable statistics.
A Seshan, Mumbai
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