ECBs, NRI deposits push external debt to $476 bn

India’s external debt rose by $29.5 billion or 6.6 per cent, to $475.8 billion in financial year 2014-15, mainly due to higher borrowings by India Inc and surge in NRI deposits.

Long-term external debt surged by 10.3 per cent to $391.1 billion during financial year 2014-15, and accounted for 82.2 per cent of total external debt.

The share of long-term debt was 79.5 per cent of total debt at the end of March 2014, an official statement said.

However, the short-term external debt fell 7.6 per cent to $84.7 billion at end-March 2015, mainly due to the decline in foreign institutional investment in government Treasury Bills.

“The share of short-term external debt in total external debt declined to 17.8 per cent in FY15 from 20.5 per cent in FY14,” the statement said..

The government’s (sovereign) external debt stood at $89.7 billion at end-March 2015 as compared with $83.7 billion at end-March 2014. The share of government external debt in total external debt was a shade higher at 18.9 per cent at end-March 2015, compared with 18.8 per cent at end-March 2014.

Swap scheme

A sharp increase in NRI deposits was witnessed since 2013-14 after the Reserve Bank of India (RBI) offered a special swap scheme in September 2013. The step was taken to shore up the Indian rupee which had fell to a historic low. It also helped build foreign exchange reserves.

India has the second-largest diaspora in the world, with a community estimated at more than 25 million, according to official figures.