30 Dec 2017 16:26 IST

India's external debt in 2nd quarter rises 2% over the first

Spike in foreign portfolio investment in the debt segment

India’s external debt stock stood at $495.7 billion at September-end 2017, according to a Finance Ministry statement.

Total external debt at quarter ending September 2017 increased by $10 billion or 2.1 per cent compared to the external debt position at the end of the June 2017 quarter.

This is an increase of $23.9 billion or 5.1 per cent over the level at March-end 2017, the statement added.

The rise in external debt during the period was due to the increase in foreign portfolio investment (FPI) in the debt segment of domestic capital market included under commercial borrowings. Some increase in short-term debt was due to trade related credit that contributed to the overall increase in total external debt.

US dollar denominated debt accounted for 50 per cent of India’s total external debt at the end of September 2017.

The depreciation of the US dollar against the SDR, Euro and pound sterling stood at $1.4 billion in September 2017 compared to March 2017.

This implies that excluding the valuation effect (currency fluctuation), increase in debt would have been lower at $22.5 billion instead of $23.9 billion at September-end 2017 over the March-end 2017 levels, the statement added.

The share of government (Sovereign) debt in the total external debt was 21.6 per cent in the quarter ending September 2017.

This was mainly due to the increasing level of foreign portfolio investment in government securities.

The share of FPI investments stood at 19.4 per cent at end of March 2017, the statement said.

Long-term debt at September-end 2017 was at $403 billion, showing an increase of $19.1 billion (5 per cent) over the level at March-end 2017.

Short-term debt

Short-term external debt registered an increase of 5.4 per cent and stood at $92.7 billion at September-end 2017, though its share in total debt at 18.7 per cent was only marginally higher than the 18.6 per cent at March-end 2017.

The foreign exchange cover to total external debt improved to 80.7 per cent at September-end 2017 from 78.4 per cent at March-end 2017, the statement added.

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