New Delhi: India’s external debt recorded an increase of 30.4% to $221.2 billion during 2007-08 primarily on account of high overseas corporate borrowings, short-term debt and depreciation of dollar.
Corporate overseas borrowings rose by 39.5% and short-term borrowings increased by 34.8%, an official release said.
However, the government’s debt as a proportion of total external debt declined from 28.4% to 25.6%.
Also, the weakening of dollar accounted for around 20% of the total increase in external debt.
With the appreciation of rupee primarily against the dollar, increase in external debt in rupee terms was lower at 19.6% during the year.
The release further said that external debt was in the comfort zone with the foreign exchange cover of the debt being at 140 per cent during the last fiscal, up from 117.4% a year-ago.
Debt service ratio, which indicates the ability to repay loans, remained low at 5.4% during 2007-08, though this was marginally higher by 0.6 percentage points over the previous year.
Other indicators like ratio of external debt to Gross Domestic Product, which indicates the indebtedness of a country, was 18.8% during 2007-08 and the ratio of short-term debt to foreign exchange reserves stood at 14.3%.
The ratio of short-term debt to total external debt was 20 per cent in the end of March this year.