India’s external debt
What is 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.
- Governments and eligible corporations can raise loans from abroad.
Components of external debt
- India’s external debt includes
- Commercial Borrowings,
- Sovereign Borrowings,
- Non-Resident Deposits,
- Trade credits.
Why in News?
- As per the latest Finance Ministry report titled ‘India’s External Debt: A Status Report: 2019-2020’, India’s total external debt increased by 2.8% to $558.5 billion at the end of March mainly on account of a rise in commercial borrowings.
News in detail
- The ratio of foreign currency reserves to external debt stood at 85.5% as at end-March, compared to 76% in 2019 March.
- External debt as a ratio to GDP rose marginally to 20.6%, from 19.8 %.
- Loans from multilateral and bilateral sources under external assistance — the largest constituent of sovereign borrowings — grew 4.9% to $87.2 billion.
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