India’s external debt rose to $717.9 billion by the end of December 2024, reflecting an increase due to various economic factors, including currency fluctuations, trade deficits, and capital inflows.
Key Highlights:
- Year-on-Year Growth: The debt has increased compared to the previous year, driven by government borrowings, private sector loans, and external commercial borrowings (ECBs).
- Composition: A significant portion of the debt remains denominated in U.S. dollars, making it vulnerable to exchange rate volatility.
- Debt-to-GDP Ratio: The external debt-to-GDP ratio remains within manageable limits, but the rising debt calls for careful monitoring.
- Government vs. Private Sector: While a portion of the debt is sovereign, a substantial amount is held by private entities, including corporate borrowings and trade credits.
- Foreign Exchange Reserves: India’s forex reserves act as a buffer against external debt risks, though any sharp depreciation of the rupee could increase repayment pressures.
The increase in external debt highlights the need for prudent fiscal management, a balanced approach to borrowing, and strategies to enhance foreign exchange earnings through exports and foreign investments.
By Bharat Global Time
