External debt peaks to $ 99 bn

The external debt to the Gross Domestic Product (GDP) of the country stood at 22.3 per cent in December 1999 as compared to 24.4 per cent in March 1998. The ratio had peaked to 41 per cent in 1992.

But in terms of absolute level of debt, India’s position improved from the third largest debtor after Brazil and Mexico in 1991 to ninth in 1998.

Though the debt position had returned to the peak levels of 1995, key debt indicators, however, continued to improve making external debt manageable, it said.

Out of the total external debt, $ 94.34 billion constituted long-term debt while short-term debt constituted only $ 4.67 billion, it said.

The debt service ratio declined from the peak of 35.3 per cent of current receipts in 1990-91 to 19.0 per cent in 1998-99.

"This implies that while more than one-third of the current receipts were needed in 1990-91 to meet country’s debt-service obligations, less than one-fifth of the same required in 1998-99," the report said.

The report said the ratio of short-term to total external debt has declined gradually from the high of 10.2 per cent in March 1991 to 4.5 per cent in March 1999, but increased marginally to 4.7 per cent by December 1999.

The improvement in India’s external debt position since 1991-92 is due to a conscious debt management policy that focussed on high growth rate of exports, keeping the maturity structure as well as the total amount of commercial debt under manageable limits, limiting short-term debt and encouraging non-debt creating flows.

Efforts are now on to further consolidate the gains already made, the report said adding a number of new initiatives have been undertaken to meet this objective.

This include increased coverage and computerisation of external debt data, better co-ordination among agencies that report debt statistics and measures to actively manage sovereign external debt of the country.

The report said India’s debt service ratio declined to 18.2 per cent in the first three quarters of 1999-2000. The total external debt in dollar terms has been stable during the last decade, increasing by $ 15.2 billion from end-March 1991 to end-March 1999.

The countries which are worse of than India in the external debt burden are Brazil, Russia, Mexico, China, Indonesia, Argentina, Korea and Turkey. India’s external debt at the end of 1998 is second lowest after China among the top 15 debtor countries.