India's external debt jumps 30 percent to USD 221 bn

New Delhi, Sep 4 : India's external debt jumped 30.3 percent to USD 221.2 billion at the end of March, due mainly to the weakening of the American dollar, the finance ministry said Thursday.

At the same time, the foreign exchange reserve cover for the country's external debt continued to be high, up from 117.4 percent during 2006-07 to 140 percent during the next fiscal, the statement by the finance ministry said.

External debt represents the money that the Government of India owes to creditors outside the country, including other governments, global funding institutions like the World Bank, corporations and even private households.

As per statistics available with the Reserve Bank of India (RBI), the country's foreign exchange reserves - including currencies and gold - stood at $297.28 billion on Aug 22.

"All the major solvency and liquidity indicators of external debt continued to remain in the comfort zone," said the finance ministry in its "India's External Debt: A Status Report" that is being published since 1993.

"The escalation in external debt during the year could be ascribed mainly to rise in external commercial borrowings, at 39.5 percent, and short-term debt, at 34.8 percent," the report said.

The debt service ratio also remained low at 5.4 percent during 2007-08, though slightly higher by 0.6 percentage points over the previous year, even as the ratio of external debt to gross domestic product (GDP) was also comfortable at 18.8 percent.

"India's debt service ratio was the second best after that of China."

A cross-country comparison based on the data available with the World Bank's Global Development Finance Report for 2008 shows that India ranked fifth among the top 10 debtor countries of the developing world in terms of external debt.

--IANS