India’s external debt surged to $663.8 billion in FY24, marking a $39.7 billion increase from the previous year, according to data from the Reserve Bank of India (RBI). Despite the rise in absolute terms, the external debt-to-GDP ratio declined to 18.7% at the end of FY24 from 19% at the end of FY23. This ratio encompasses both government and non-government debt.
The RBI data reveals that government external debt accounts for 4.2% of GDP, while non-government debt stands at 14.5%.
The central bank highlighted the impact of currency valuation, stating, “Valuation effect due to the appreciation of the US dollar against the Indian rupee and other major currencies such as the yen, the euro, and SDR amounted to $8.7 billion. Excluding this valuation effect, external debt would have increased by $48.4 billion instead of $39.7 billion at end-March 2024 over end-March 2023.”
US dollar-denominated debt remains the largest portion of India’s external debt, comprising 53.8% as of end-March 2024. This is followed by debt denominated in the Indian rupee (31.5%), yen (5.8%), SDR (5.4%), and euro (2.8%).
The RBI’s report indicates that general government debt rose by 11.5% year-on-year (YoY) as of March 2024, while the debt held by households and nonprofit institutions serving households declined by 16.5%.
Non-financial corporations hold the largest share of outstanding external debt at 37.4%, with the general government holding a 22.4% share.
“Loans continued to be the largest component of external debt, accounting for 33.4%, followed by currency and deposits (23.3%), trade credit and advances (17.9%), and debt securities (17.3%),” the RBI noted.