India's external debt up 13% at $390 bn in FY13

India's external debt up 13% at $390 bn in FY13 Mumbai: India's external debt rose by nearly 13 percent to USD 390 billion in 2012-13, mainly due to rise in short-term trade credit and external commercial borrowings (ECBs) in the back of high current account deficit, the Reserve Bank said on Thursday.

"The high current account deficit witnessed during 2012-13 and it's financing increasingly through debt flows particularly by trade credit resulted in significant rise in India's external debt during 2012-13," RBI said in a release.

The increase in the debt during 2012-13 was primarily on account of rise in short-term trade credit. There has been sizeable rise in ECBs and rupee denominated Non-resident Indian deposits as well, it said.

"However, magnitude of increase in external debt was offset to some extent due to valuation change (gain) resulting from appreciation of US dollar against Indian rupee and other international currencies," the RBI added.

The total external debt was about USD 345.5 billion at end-March 2012.

RBI further said that excluding the valuation change due to the movement of US dollar against major international currencies and rupee, the external debt as at end-March 2013 would have increased by USD 55.8 billion. However, the actual increase was lower at USD 44.6 billion.

As per the data, share of ECBs (USD 120.9 billion) continued to be highest at 31 percent of the total debt, followed by short term debt (24.8 percent) and NRI deposits (18.2 percent).

Trade credit components of external debt (both long-term and short-term) showed an increase of USD 20.3 billion during the period. NRI deposits increased by USD 12.2 billion to USD 70.8 billion as at end-March 2013 primarily on account of increase in rupee denominated NRI deposits reflecting the impact of deregulation of interest rates on these deposits in December 2011, RBI added. As far as the currency composition of the debt is concerned, the US dollar denominated debt continued to be the largest component with a share of 57.2 percent, followed by rupee (24 percent), SDR (7.5 percent), Japanese yen (6.3 percent) and euro (3.5 percent). The ratio of foreign exchange reserves to external debt as at end-March 2013 at 74.9 percent was lower than the level of end-March 2012 (85.2 percent). PTI