India's external debt climbed 6.6% to $326.6 billion by September-end from $306 billion at the beginning of the current financial year on account of a sharp increase in commercial borrowings, export credits and short-term debts, official data showed on Friday.
Short-term debt accounted for 21.9% of the country's total external debt by the end of the second quarter of 2011-12, while the rest 78.1% was long-term.
“The increase in external commercial borrowings reflects some concern, given that the depreciation of the rupee leads to higher debt service burden in rupee terms that could impact profitability and the balance sheets of corporate borrowers,” a finance ministry statement said.
The rupee has depreciated by almost 20% in the last five months.
Between end-March 2006 and end-March 2011, commercial borrowings registered a compound annual growth 27.4%.
Component-wise, the share of external commercial borrowings stood highest at 30.3% in total external debt followed by NRI deposits 16.0% and multilateral debt 15.0% as on Sep 30.
The government and non-government element in the total external debt was 24.3% and 75.7% respectively.
The share of debt denominated in US dollar was the highest in India’s external debt stock at 55.8%, followed by the Indian rupee 18.2% and Japanese Yen 12.1%.
As on September-end India's foreign exchange reserves provided a cover of 95.4% to the total external debt stock, while it was 99.5% at beginning of the current fiscal.
The ratio of short-term external debt to foreign exchange reserves stood at 22.9% at end-September 2011, as compared to 21.3% at March 2011.
“Other indicators of India’s external debt remain within manageable limits,” the ministry said.
The ratio of concessional debt to total external debt declined to 14.7% in September as compared to 15.5% at the beginning of the year.
As per the standard practice, India's external debt statistics for the quarters ending March and June are released by the Reserve Bank of India and those for the quarters ending September and December by the finance ministry. The external debt data are released with a lag of one quarter.