India’s external debt ratio falls to 13-year low of 18.7% in FY24

Other financial corporations also witnessed their debt reduce by 11.8 percent over the year.

“The share of short-term debt in total external debt declined to 18.5 percent at end-March 2024 from 20.6 percent at end-March 2023. Similarly, the ratio of short-term debt to foreign exchange reserves declined to 19 percent at end-March 2024,” the RBI said.

Dollar-denominated debt remained the largest component of India’s external debt, with a share of 53.8 percent. Around a third of debt was rupee-denominated, followed by Yen with a 5.8 percent share.

The share of outstanding debt of non-financial corporations in total external debt was the highest at 37.4 percent, with the general government having a 22.4 percent share.

Loans were the largest component with a 33.4 percent share, followed by currency and deposits at 23.3 percent.

India’s debt servicing improved during this period, rising to 6.7 percent from 5.3 percent in the previous year.

The country’s foreign exchange to debt ratio improved to 97.4 percent in FY24 from 92.7 percent in the previous year.

S&P Global Ratings recently revised India’s outlook upwards to stable, indicating that a further improvement in general government debt will likely lead to a rating upgrade. India is currently rated ‘BBB-‘ by the rating agency.