External debt of India

The external debt of India is the total debt the country owes to foreign creditors. The debtors can be the Union government, state governments, corporations or citizens of India. The debt includes money owed to private commercial banks, foreign governments, or international financial institutions such as the International Monetary Fund (IMF) and World Bank.

India's external debt data is published quarterly, with a lag of one quarter. Statistics for the first two quarters of the calendar year are compiled and published by the Reserve Bank of India. Data for the last two quarters is compiled and published by the Ministry of Finance. The Government of India also publishes an annual status report on the debt which contains detailed statistical analysis of the country's external debt position.

India’s external debt was US$ 563.5 billion at the end of December 2020. It recorded a marginal decrease of US$ 0.5 billion over its level at end of December 2019. The external debt to GDP ratio increased to 21.4% at end of December 2020 from 20.1% an year ago.

The foreign currency reserves increased to over US $585 billion at the end of December 2020 compared to over US $459 billion at the end of December 2019. Hence the foreign currency reserves as a ratio to external debt improved to 103.9% at end of December 2020 from 81.4% at end of December 2019.

Long-term debt

The composition pattern of India's external debt is noted below. Long-term borrowings (more than a year to maturity) dominate India's external debt. India classifies its long-term external debt into seven heads. The external debt column notes the value of external debt stock outstanding at the end of December 2020.

S. No.	Component of Long-term debt	Debt (US$ billion) December 2019	Debt (US$ billion) December 2020	Percentage share December 2020
1	Multilateral	60.2	67.9	12.05%
2	Bilateral	27.3	30.5	5.41%
3	IMF loans	5.5	5.7	1.01%
4	Export credit	6.9	6.6	1.17%
5	Commercial borrowings	223.1	207.7	36.86%
6	NRI deposits	133.1	140.5	24.93%
7	Rupee debt	1.1	1.0	0.18%
	Total Long-term debt	457.2	460.0	81.63%
	Total Short-term debt	106.8	103.5	18.37%
	Total External Debt	564.0	563.5	100%

Multilateral

Multilateral debt is the money India owes to international financial institutions such as the Asian Development Bank (ADB), the International Development Association (IDA), the International Bank for Reconstruction and Development (IBRD), the International Fund for Agricultural Development (IFAD) and others. Borrowing from the International Monetary Fund (IMF) are not included under multilateral debt, and are instead classified separately under the IMF head. As on 31 December 2020, India had a total multilateral debt of $67.9 billion. The country's major creditors are the IDA, ADB, and IBRD. The IFAD and a few other multilateral creditors hold the remaining portion of the multilateral debt.

Bilateral

Bilateral debt is the money India owes to foreign governments. As on 31 December 2020, India had a total bilateral debt of $30.5 billion.

Currency composition

India's external debt is held in multiple currencies, the largest of which is the United States dollar. As on 31 March 2020, 53.7% of the country's debt was held in U.S. dollars. The rest of the debt is held in Indian rupees (31.9%), Japanese yen (5.6%), special drawing rights (4.5%), Euros (3.5%) and other currencies (0.8%).

Concerns and issues

Moody’s Investors Service upgraded India's government bond rating from Baa3 to Baa2 on 16 November 2017. In the announcement, Moody’s noted that "greater expectation of a sizeable and sustained reduction in the general government debt burden, through increased government revenues combined with a reduction in expenditures, would put positive pressure on the rating."