External Debt

External debt is the portion of a country’s debt that is borrowed from foreign lenders through commercial banks, governments, or international financial institutions.
If a country cannot repay its external debt, it faces a debt crisis. If a nation fails to repay its external debt, it is said to be in sovereign default.
India’s external debt includes Commercial Borrowings, Sovereign Borrowings, Non-Resident Deposits, Multilateral Loans and Trade credits.

India’s external debt during the first quarter of 2022-23 declined by $2.5 billion to $617.1 billion over end-March 2022.
The external debt to GDP ratio declined to 19.4% at end-June 2022 from 19.9% at end-March 2022.
Valuation gains due to the appreciation of the U.S. dollar vis-a-vis the Indian rupee and major currencies, such as yen, SDR and euro were placed at $14.4 billion.
At the end-June 2022, long-term debt (with an original maturity of above one year) was placed at $487.3 billion, recording a decrease of $10.6 billion over its level at end-March 2022.
On the other hand, the share of short-term debt (with an original maturity of up to one year) in total external debt increased to 21% at end-June 2022 from 19.6% at end-March 2022.
U.S. dollar-denominated debt remained the largest component of India’s external debt, with a share of 54.7% at end-June 2022, followed by debt denominated in the Indian rupee (30.4%), SDR (6.3%), yen (5.1%), and the euro (2.8%).
The outstanding debt of the general government decreased, while non-government debt increased at end-June 2022.

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