A "manageable" short-term external debt and a decreasing proportion of concessional debt mark the structural change in the country's foreign debt basket, according to the status report on India's external debt.
The country's short-term external debt in September 1997 was equivalent to $5.83 billion or Rs 23,900 crore.
This is 6.28 per cent of the country's total external debt-stock and has been described in the report as "low by international standards".
India classifies borrowings with an original maturity of up to one year as short-term debt.
The proportion of concessional debt in the total (basket), the report says, has been steady at about 45 per cent since the beginning of the decade.
It points out that "the share declined to 42.8 per cent in end-March 1997 and further to 41.4 per cent in end-September 1997".
The country's share of concessional debt, however, continues to be high by international standards.
The share of concessional debt in India's total external debt stood at 44.7 per cent in 1996, which was the highest in a World Bank sample of 15 countries.
In comparison, countries like Indonesia (20.3 per cent), China (14.5 per cent), Thailand (7.8 per cent), Malaysia (6.4 per cent), Argentina (2.7 per cent), Brazil (1.1 per cent), Mexico (0.9 per cent) and Venezuela (0.3 per cent) ranked much lower.
The finance ministry's status report notes: "Short-term debt has repeatedely appeared as an important risk factor in the precipitation of a foreign exchange crisis, especially when coupled with high or unsustainable current account deficits.
India, however, is comfortably placed vis-a-vis other debtor countries, with one of the lowest ratios of short-term (debt) to total."
According to World Bank 1996 data on the ratios for different countries, India's short-term debt stood at 7.5 per cent of the total stock, compared to 9.5 per cent for Russia, 13 per cent for Argentina, 19.7 per cent for China, 25 per cent for Indonesia, 27.8 per cent for Malaysia and 41.4 per cent for Thailand.
However, the short-term debt as a proportion of the total external debt has increased in the past few years.
While it declined from 10.2 per cent in 1990-91 to 3.9 per cent in 1993-94, it has again gradually grown to 5.5 per cent in 1995-96 and 7.3 per cent in 1996-97.
A jump in non-resident Indian (NRI) deposits was mainly responsible for the increase, the status report notes.
The management of the country's short-term exposure has been among the top priorities of the government's debt strategies; more so after the currency crises that ravaged the South East Asian economies last year.
High short-term debt was identified as one of the factors that triggered the crises.
The government's status report on external debt reiterates its commitment to keeping this vital component low.
"Though India's short-term exposure has been low by international standards, a more conscious short-term debt management policy that makes allowance for contingencies and learning from the experience of South East Asian countries needs to be adopted," it advises.
