17 October 2010

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Know about Indian External Debt for year 2009 – 2010. Report on Indian External Indian Debt for year 2009 – 2010

Know about Indian External Debt for year 2009 – 2010. Report on Indian External Indian Debt for year 2009 – 2010

External debt stock of 128 developing countries stood at US$ 3,718.5 billion at end-December 2008, up by 7.8 per cent over its previous year's level of US$ 3,450.8 billion

India was the fifth most indebted country in 2008 in terms of absolute debt stock amongst
the top twenty debtor countries of the developing world, after Russian Federation, China, Turkey, and Brazil.

India's external debt increased from US$ 224.5 billion at end-March 2009 to US$ 261.5
Billion at end-March 2010.
The total increase was US$ 37.0 billion (16.5 per cent).
One American Dollar equal to nearly 50 Indian Rupees, this keep changing 48 or 50 like this.

External debt of a country indicates contractual liability of residents to non-residents. In
Rupee terms, India's external debt of Rs. 1,180,073 crore at end March 2010, registered a rise of Rs. 36,283 crore (3.2 per cent) over the end-March 2009 estimates.

The long-term debt at US$ 209.0 billion at end-March 2010, accounted for about 80 per cent of the total external debt.
The long-term debt increased by 15.4 per cent over the level at end-March 2009

Government (sovereign) external debt stood at US$ 67.1 billion at end-March 2010, higher by US$ 11.2 billion (20 per cent) over its level of US$ 55.9 billion at end-March 2009.
It accounted for 25.7 per cent of the total external debt as compared to 24.9 per cent at end-March 2009.
Government guaranteed external debt was marginally higher at US$ 7.7 billion (US$ 6.8 billion at end-March 2009)

As per the World Bank publication 'Global Development Finance, 2010', India was at fifth position among top twenty developing indebted countries in 2008 in terms of stock of external debt, after Russian Federation, China, Turkey and Brazil

The ratio between long and short-term debt was around 80:20 at end-March 2010. Among the long-term components, commercial borrowings accounted for the largest share followed by NRI deposits, multilateral, bilateral and export credit.

The share of private creditors increased from 60.3 per cent in 2005 to 70.5 per cent at end-March 2010.

The share of government debt was 25.7 per cent, while the share of non-government debt was 74.3 per cent in total external debt at end March 2010.

US dollar denominated debt, with its share of 53.3 per cent at end-March 2010, continues to dominate India's total external debt.
The element of concessionality in total external debt stood at 16.8 per cent at end-March 2010.

India's Short-term debt at end-March 2010 stood at US$ 52.5 billion, reflecting an increase
of 21 per cent over end-March 2009 level.
Trade related credits contributed 84 per cent of the total rise in short-term debt stocks at end-March 2010.
The share of trade credit in short-term debt was 90.7 per cent at end-March 2010 as against 92.2 per cent at end-March 200

Special Drawing Rights (SDR) –
Allocations of SDR 3082.5 million on August 28, 2009 and SDR 214.6 million on September 9, 2009 and the consequent increase in cumulative SDR allocations to US$ 6.2 billion at end-December 2009.
SDR allocations fall in the category of ‘long-term reserve-related liability’ of the country to the other participants of the IMF’s SDR Department and according to the
Rules prescribed in the sixth edition of the Balance of Payments and International Investment Position Manual (BPM6) is included as debt liability

The SDR was created by the IMF in 1969 to serve as an international reserve asset to supplement the official reserves of the member countries.
The SDR valuation basket, w.e.f January 1, 2006, consists of the following
Currencies with their associated weightages: US Dollar (44 per cent), Euro (34 per cent), Japanese Yen (11 per cent) and Pound Sterling (11 per cent) (Source: IMF).

The currency composition of India's external debt reveals that the US dollar denominated debt remained dominant.
The share of US dollar debt in total external debt was at 53.3 per cent at end-March 2010 (slightly less than the 54.1 per cent registered at end-March 2009), followed by the Indian rupee (18.7 per cent), Japanese yen (11.4 per cent) and SDR (10.7 percent).

Rupee Debt; The outstanding state credits (both defence and civilian) extended to India by the erstwhile Union of Soviet Socialist Republics (USSR).
The debt is denominated in Rupees and repayment of such debt is made primarily through the export of goods to Russia;

The NR (E) RA is categorized as an external debt liability since the principal amount held in such accounts as well as the interest accrued are repatriable. In case of the NRO Account, Norris and Persons of Indian Origin (PIO) are eligible to annually remit an amount up to US$ 1 million out of the balances held in such accounts.

Debt service projections based on long-term debt outstanding at the end of March 2010,
show that debt service payments will reach the high of US$ 21.3 billion (US$ 18.2 billion principal repayment and US$ 3.1 billion interest) in 2012-13

The analysis of external debt of 128 developing countries reveals that out of the total external debt stock of US$ 3718.5 billion in 2008, twenty developing countries accounted for US$ 2999.0 billion (80.7 per cent).

Among the top twenty debtor countries, the external debt stock of Argentina and Thailand declined between 2000 and 2008.

A sharp rise was noticed in the external debt stock of Romania (840.3 per cent), Latvia (767.3), Kazakhstan (765.4 per cent), Ukraine (658.6 per cent), Poland (236.3 per cent) and Russian Federation (151.5 per cent).

China recorded an increase of 159.6 per cent in its external debt stock, while India's external debt increased by 130.1 per cent during the period 2000-2008

Government of India has been borrowing only from the multilateral and bilateral sources. Other debt liabilities of the Government include defence debt, investments by Foreign Institutional Investors (FIIs) and other central banks in treasury bills and dated government securities and Rupee debt owed to Russia

During end-March 2009 and end-March 2010, sovereign external debt (SED) increased by US$ 11.2 billion (20.0 per cent) from US$ 55.9 billion to US$ 67.1 billion.

The share of US dollar in sovereign external debt has declined from 37 per cent in 1998 to 26.5 per cent at end-March 2010

Gross external debt, at a point in time, is defined as “the outstanding amount of those actual current, and not contingent, liabilities that require payment(s) of principal and/or interest by the debtor at some point(s) in the future and that are owed to non-residents by residents of an economy” (External Debt Statistics - Guide for Compilers and Users, International Monetary Fund (IMF), 2003).

Non Resident (External) Rupee Account {NR (E) RA} Deposits were introduced in 1970.
Any NRI can open an NRE account with funds remitted to India through a bank abroad. A NRE account maintained in Indian rupees may be opened as current, savings or term
The amount held in these deposits together with the interest accrued can be

Foreign Currency Non Resident (Banks) Deposits {FCNR (B)} were introduced with
effect from May 15, 1993.
These are term deposits maintained only in Pound Sterling, US dollar, Japanese Yen, Euro, Canadian dollar and Australian dollar.
The minimum maturity period of these deposits was raised from six months to 1 year effective October 1999. From July 26, 2005, banks have been allowed to accept FCNR (B) deposits up to a maximum maturity period of five years against the earlier maximum limit of three years.

Non-Resident Ordinary Rupee (NRO) Accounts – Any person resident outside India may
open and maintain NRO account with an authorized dealer or in authorized bank for the
purpose of putting through bonafide transactions denominated in Indian rupees.
NRO Accounts may be opened/maintained in the form of current, saving, recurring or fixed deposits. NRI/Persons of Indian Origin (PIO) may remit an amount not exceeding USD 1 million per financial year out of the balances held in NRO Accounts.

So Much Debt on Indians and where does this all money go , everyone knows the answer

Reality views by sm –
Sunday, October 17, 2010


shilpa,  October 17, 2010  

never read about this.

Sathish Chandrasekaran (சதீஷ் சந்திரசேகரன்) October 17, 2010  

very comprehensive facts ,hey if its possible could you explain how the Indian Rupee is calculated against foreign currencies :)

sm,  October 17, 2010  

I will try to write post on the topic suggested by you how the Indian Rupee is calculated against foreign currencies
but it will take time.

NRIGirl October 17, 2010  

Numbers, numbers, numbers is there ever an end to numbers...

Thank you SM for the detailed post. Yes, I too will be interested in what Sat_hi_sh has suggested.

~ NRIGirl

SG October 18, 2010  

Nice and informative one. I don't think many Indians are aware that this is not free money and they have to repay this debt someday in the future.

Insignia October 18, 2010  

Phew!!! Now I have to work more to repay this debt!!

sm,  October 18, 2010  


sm,  October 18, 2010  

yes agree with you,

Neha October 18, 2010  

is this our state right now? that's an eye opener!!

sm,  October 19, 2010