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India's external debt rises to US$136.5 bln
External commercial borrowings, NRI deposits & short term debt rise

India's external debt stock at US$136.5 billion at the end of September 2006, showed an increase of US$4.3 billion as compared to US$132.2 billion at end-June 2006. The rise in external debt outstanding at end-September 2006 was essentially brought about by a rise in external commercial borrowings, NRI deposits and short term debt.

In terms of components, long-term debt outstanding at US$125.9 billion at end-September 2006 showed an increase of US$2.8 billion over the quarter. Under long-term debt, multilateral debt rose by US$493 million which was partly offset by a drop in bilateral credits by US$ 100 million. Export credit outstanding rose by US$165 million. The stock of commercial borrowings at US$32,462 million was higher by US$1,363 million as compared with those at the end of the preceding quarter. While Rupee debt remained broadly at the same level as at the end of previous quarter, NRI deposits rose by US$912 million to US$36,563 million.

Short-term debt increased by 16.2 percent over the quarter to US$10,579 million at end- September 2006 on account of a rise in trade credits. Increase in trade credits can be attributed to higher import bill during the current year.

In terms of their share in total debt stock, Non-Resident deposits accounted for 26.8 per cent of the total debt at end-September 2006, followed by multilateral debt at 24.6 per cent and commercial borrowings at 23.8 per cent. The share of bilateral debt was 11.5 per cent. Export credit and Rupee debt accounted for 4.1 percent and 1.4 per cent, respectively. The share of short-term debt was 7.8 per cent.

India’s foreign currency reserves including foreign currency assets of the RBI, gold, SDRs and Reserve Tranche Position in the International Monetary Fund stood at US$165.3 billion as at the end of September 2006. Foreign currency assets of the RBI were of the order of US$158.3 billion as on September 30, 2006 providing a cover of around 116 per cent to total external debt stock.

US dollar continued to be the major currency of denomination in India’s external debt portfolio. The share of US dollar in the debt stock of the country increased further from 45.4 per cent at end-March 2006 to 46.7 per cent at end-September 2006.

Prudent external debt management policies are pursued by the Government to maintain external debt within manageable limits. These include emphasis on raising funds on concessional terms and from less expensive sources with longer maturities, monitoring of short-term debt, prepaying high cost loans, rationalizing interest rates on NRI deposits, restricting end-use of external commercial borrowings, limiting trade credits and encouraging non-debt creating capital flows.

Indian economy grew by a robust 9.2%




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