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INDIA’S EXTERNAL DEBTA Status Report
GOVERNMENT OF INDIAMINISTRY OF FINANCE
DEPARTMENT OF ECONOMIC AFFAIRSAUGUST, 2002
INDIA’S EXTERNAL DEBTA Status Report
GOVERNMENT OF INDIAMINISTRY OF FINANCE
DEPARTMENT OF ECONOMIC AFFAIRSAUGUST, 2002
FOREWORD
The eighth Status Report on India’s External Debt aims at taking a stock of theexternal debt of the country, in December, 2001. It is encouraging that despite an increasein external debt stock from US $ 93.7 billion, at end-March 1996, to US $ 98.4 billion, atend-December, 2001, substantial improvement has been witnessed in external debtindicators. External debt to GDP, has declined from 38.7 per cent at end-March 1992, to20.7 per cent at end-December, 2001. External debt service ratio has declined from 35.3per cent in 1990-91, to 13.0 per cent at end December, 2001. Similarly, the ratio of short-term debt to total external debt has declined from a peak of 10.2 per cent at end-March,1991, to 2.8 per cent at end-December, 2001. At the same time, with significant increasein foreign exchange resources, short-term debt as a portion of foreign exchange assetsdeclined from the peak level of 382.1 per cent to 6.1 per cent over the same period.
This is indicative of an active debt management policy being pursued by thegovernment, which focuses on keeping the maturity structure as well as total amount ofcommercial borrowings under manageable limits, restricting inflows of short term debt,encouraging non-debt creating financial flows, particularly foreign direct investment, andemphasizing the growth of exports and invisible earnings on current account.
To further consolidate these gains, our endeavor is to further strengthen themonitoring and management of external debt, improve coverage and dissemination ofdebt data, achieve better co-ordination among agencies reporting debt statistics and provideadequate management information system inputs for debt management decisions. Allthese would enable a sound analysis of the external debt portfolio, thus assisting decisionmaking and enabling prepayment of more expensive debt.
To improve the coverage and discussion of issues, some new features have beenadded to this report. These pertain to prepayment of high cost external debt, per capitaexternal debt burden and historical data on debt service payments. It is hoped that thisreport would be of use to the Members of the Parliament, scholars, researchers and thegeneral public in understanding and analysing the external debt situation of the country.
(Jaswant Singh)Minister of Finance & Company Affairs
New DelhiAugust 13, 2002.
1
CORRIGENDUM
1. Figure 3.2 at page 14 may be read as under:
8.4
10.011.1
15.517.2
25.9
39.6
42.0
45.6
53.2
56.2
77.193.8
112.6
123.0
0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0
( Per Cent)Top fifteen Debtor Countries ordered by ratios of Short-term Debt to Forex Reserves (descending order) Source: Global Development Finance,2002, Country Tables, The World Bank.
India
China
Venezuela
Malaysia
Chile
Poland
Phillipines
Korea Republic
Thailand
Mexico
Russian Federation
Indonesia
Brazil
Argentina
Turkey
Figure 3.3 :International comparision-Proportion of Short-term Debt to Reserves, 2000.
Figure 3.2 : International compar ison- Propor tion of short-term to Total External Debt, 2000.
3.5
4.6
6.8
9.7
11.1
11.2
11.5
11.9
12.6
13.0
16.0
18.7
19.4
24.9
30.1
0 5 10 15 20 25 30 35
India
Venezuela
Chile
Russ ian Feder ation
Malaysia
P oland
China
Phil lipines
Mexico
Brazil
I ndonesia
Thailand
Argentina
Turkey
Korea Repub lic
( Per Cent)
Note: Top fifteen Debtor Countriesordered by ratios of Short-term to tota l External Debt (descending order)
Source: Global Development Finance, 2002, Country Tables , The World Bank.
(Percent)
Note: Top fifteen Debtor countries ordered by ratios of Short-term to total External Debt (descending order).
Source: Global Development Finance, 2002, Country Tables, The World Bank.
(Percent)
Note: Top fifteen Debtor countries ordered by ratios of Short-term Debt to Forex Reserves (descending order).
Source: Global Development Finance, 2002, Country Tables, The World Bank.
2. Figure 3.3 at page 15 may be read as under:
2
CORRIGENDUM
3. Figure 4.1 at page 18 may be read as under:
Figure 4.1 Internationational comparison-Proportion of concessional Debt to Total External Debt
0.20.20.80.91.01.11.2
4.35.4
10.711.9
18.721.3
24.843.7
0 5 10 15 20 25 30 35 40 45 50
Russian Federation
Venezuela
Mexico
Brazil
Chile
Korea Republic
Argentina
Turkey
Malaysia
Poland
Thailand
China
Indonesia
Phillipines
India
(Per cent) Note: Top fifyteen Debtor countries ordered by ratio of Concessional Debt to Total Debt (descending order) Source: Global Development Finance, 2002, Country Tables, The World Bank.
(Percent)
Note: Top fifteen Debtor countries ordered by ratio of Concessional Debt to Total Debt (descending order).
Source: Global Development Finance, 2002, Country Tables, The World Bank.
4. Table No.4.3 at page 19 and Annexure 5 at page 59 for End-March 2000, may be read as under:
External Debt by Borrower Classification/Categories
(US Dollar million)
End-March 2000I. Government Debt 46,852
(47.7)Of which long term: 46,852
1. Government Account 42,8232. Other Government Debt 4,029II. Non-Government Debt 51,411
(52.3)Of which long term: 47,475Financial Sector* 25,102Public Sector** 9,316Private Sector*** 13,057Of which short term: 3,936
III. Total External Debt: 98,263(100)
5. Annexure 2 (Item No. VIII-Total Long Term Debt) at page 51 may be read as under:
End – March End-1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001RDec.,
2001QE
(US $ Million)VIII. Total Long
Term Debt(I TO VII) 75,257 78,215 83,683 89,068 94,739 88,696 86,744 88,485 92,612 94,327 96,22495,656
CONTENTS
Page No.
1. Executive Summary 1
2. External Debt 42.1 External Debt Stock 42.2 International Comparisons 6
a) External Debt Stock 6b) Change in Debt Stock 7c) Present Value of External Debt 7d) Indebtedness Classification 9e) Harmonizing External Debt Reporting 11
2.3 Per Capita External Debt 11
3. Short Term Debt 133.1 Short-term Debt by Original Maturity 133.2 Short term Debt by Residual Maturity 15
4. Classification of Debt Stock 174.1 Creditor Classification 174.2 Concessional Debt 184.3 Borrower Classification 194.4 Instrument-wise Classification 204.5 Currency Composition 21
5. Debt Service 235.1 Debt Service Payments 235.2 Debt Service Projections 27
6. External Debt Management 286.1 External Debt Management Policy 286.2 Annual Cap on External Commercial Borrowings 286.3 Short-term Debt 306.4 Non-Resident Deposits 316.5 Prepayment of high cost debt 336.6 External Debt Monitoring 36
7. Sovereign External Debt Management 387.1 Organisational Structure 387.2 Sovereign External Debt Stock 387.3 External Debt Service on Government Account 407.4 Debt Service Projections on Government Account 40
8. Contingent Liability on External Debt 438.1 Credit Guarantees on External Debt 43
9. Conclusion 46
Page No.
Text Tables1.1 India – Key External Debt Indicators 21.2 External Debt Outstanding - Quarterly Position 32.1 India’s External Debt Outstanding 42.2 International Comparison of Top Fifteen Debtor Countries, 2000 62.3 International Comparison of Present Value (PV) and PV based
Ratios, 2000 82.4 International Comparison on Indebtedness Classification, 2000 102.5 Per Capita External Debt of India - 1990-91 to 2000-01 123.1 Short-term Debt by Original Maturity 133.2 External debt by Residual Maturity up to One Year 154.1 External Debt Outstanding by Creditor Categories 174.2 Share of Concessional Debt 184.3 External Debt by Borrower Classification 194.4 Instrument-wise Classification of Long-term External Debt Outstanding 204.5 Currency Composition of External Debt 215.1 India’s External Debt Service Payments 235.2 External Debt Service by Creditor Categories 255.3 Debt Service on Short-term Trade Credit 255.4 International Comparison – External Debt Service Payments
for Top Fifteen Debtor Countries, 2000 265.5 Projected Debt Service Payments 276.1 External Commercial Borrowings 296.2 Prepayment of High Cost External Debt (2001-02 and 2002-03) 347.1 External Debt Outstanding of Government 397.2 Government Account External Debt Service 407.3 Projected Debt Service Payments on Government Account 407.4 International Comparison of Sovereign Credit Ratings 428.1 Central Government Credit Guarantees on External Debt 43
Boxes6.1 External Commercial Borrowings Policy 296.2 Short term Debt Management 306.3 Non-Resident Deposits 316.4 Key Features of Non-Resident Deposits 326.5 Full Convertibility of Non-Resident Deposits 336.6 Ad-hoc Group on Prepayment of High Cost External Debt 347.1 Sovereign Credit Rating 418.1 Contingent Liabilities 45
Figures2.1 India’s External Debt Outstanding 52.2 External Debt-GDP Ratio 52.3 International Comparison of Debt to GNP Ratio, 2000 72.4 International Comparison of Change in External Debt
Stock between 1990 and 2000 72.5 PV/XGS Ratio for India during 1994-2000 92.6 PV/GNP Ratio for India during 1994-2000 102.7 Per Capita External debt of India 1990-91 to 2000-01 123.1 Short-term Debt Ratios 14
Page No.3.2 International Comparison - Proportion of Short-term to
Total External Debt, 2000 143.3 International Comparison - Proportion of Short-term debt to
Reserves, 2000 153.4 Ratios of Short term debt by Residual Maturity 164.1 International Comparison – Proportion of Concessional
Debt to Total External Debt, 2000 184.2 Composition of Instruments in Long-term External Debt by
Borrower Category 214.3 Currency Composition of India’s External Debt at End - Dec. 2001 225.1 India’s External Debt Service Payments 245.2 Debt Service to Current Receipts Ratio 245.3 International Comparison of Debt Service to Exports of
Goods and Services Ratio, 2000 265.4 Redemption profile of External Debt Outstanding as on
December 31, 2001 277.1 Redemption profile of External Debt on Government Account 418.1 Government Credit Guarantees on External Debt 448.2 Credit Guarantees on External Debt by Government –
Projected Debt Service Profile 44
Annexures1. India’s External Debt Outstanding – (Annual -Rupees Crore) 472. India’s External Debt Outstanding – (Annual- US Dollar Million ) 503. India’s External Debt Outstanding – (Quarterly-Rupees Crore) 534. India’s External Debt Outstanding – (Quarterly-US Dollar Million ) 565. External Debt by Borrower Categories 596. India’s External Debt Service Payments 607. Debt Service by Creditor Categories 61
LIST OF ABBREVIATIONS
AA&AD - Aid Accounts & Audit DivisionA/Ds - Authorised DealersADB - Asian Development BankAFIC - Asian Finance and Investment Corporation LimitedBIS - Bank for International SettlementsBOP - Balance of PaymentsCAA&A - Controller of Aid, Accounts and AuditCDC - Commonwealth Development CorporationCS - Commonwealth SecretariatCS-DRMS - Commonwealth Secretariat – Debt Recording and
Management SystemCSO - Central Statistical OrganisationCUB - Committed Undisbursed BalanceDESACS - Department of Statistical Analysis & Computer ServicesDOD - Debt Disbursed and OutstandingDRS - Debtor Reporting SystemD/A - Delivery on AcceptanceD/P - Delivery on PaymentECB - External Commercial BorrowingsEDMU - External Debt Management UnitEURO STAT - European StatisticsFC(B&O)D - Foreign Currency (Bank & Others) DepositsFCCB - Foreign Currency Convertible BondsFC(ON) - Foreign Currency (Ordinary Non-repatriable) DepositsFC(B&O)D - Foreign Currency (Banks and Others) DepositsFCNR(A) - Foreign Currency Non-Resident AccountsFCNR(B) - Foreign Currency Non-Resident Bank DepositsFII - Foreign Institutional InvestorsFOREX - Foreign ExchangeGDP - Gross Domestic ProductGNP - Gross National ProductIBRD - International Bank for Reconstruction and DevelopmentIDA - International Development AgencyIDB - India Development BondsIDF - Institutional Development FundIFAD - International Fund for Agricultural DevelopmentIFC - International Financial CorporationIFS - International Financial StatisticsIIP - International Investment PositionIMD - India Millennium DepositsIMF - International Monetary FundJBRI - Japanese Bond Research InstituteJCRA - Japanese Credit Rating AgencyL/Cs - Letter of Credits
LIBOR - London Inter-Bank Offer RateMIS - Management Information SystemMOV - Maintenance of ValueNA - Not AvailableNRI - Non-Resident IndianNR(E)RA - Non-Resident External Rupee AccountNR(NR)D - Non-Resident Non-Repatriable Rupee DepositNR(O) - Non-Resident Ordinary AccountNR(S)RA - Non-Resident Special Rupee AccountOCBs - Overseas Corporate BodiesOECD - Organisation for Economic Cooperation and DevelopmentOPEC - Organisation of Petroleum Exporting CountriesP - ProvisionalPV - Present ValueQE - Quick EstimatesR - RevisedRBI - Reserve Bank of IndiaRIB - Resurgent India BondsSAARC - South Asian Association for Regional CooperationSBI - State Bank of IndiaSDR - Special Drawing RightsSDDS - Special Data Dissemination StandardsSLL - Self-Liquidating LoansS&P - Standard & Poor’sUS - United StatesXGS - Exports of Goods and Services
1. Executive Summary
1.1 India’s external debt stock at end-December 2001stood at US $ 98.4 billion as against US $83.8 billion at end- March 1991. It increased by US $ 1.6 billion per annum on an average from US$ 83.8 billion at end-March 1991 to US $ 99.7 billion at end March 2001. However, the debt stockdeclined by 2.9 per cent at end of December 2001 compared to corresponding period in previousyear.
1.2 In spite of an increasing trend of debt in recent years, substantial improvement in externaldebt indicators is witnessed over the time. Thus, for example, debt service ratio declined from thepeak of 35.3 per cent in 1990-91 to 15.4 per cent in 2000-01 and further to 13.0 per cent at end-December 2001. It has ensured that the country meets its debt service obligations by less than oneseventh of the current receipts at end-December 2001, while more than one third was required in1990-91. Similarly, debt-GDP ratio that signifies the extent of external debt in relation to domesticoutput, declined from a high of 38.7 per cent in 1991-92 to 20.7 per cent at end-December 2001.
1.3 Some critical indicators such as short-term to total debt ratio, short-term debt to GDP ratioand short-term debt to forex assets ratio have also improved substantially over time. During end-March 1991 to end-December 2001, short-term to total debt ratio declined from 10.2 per cent to 2.8per cent, short-term to GDP ratio from 3.0 per cent to 0.6 per cent and short-term to forex assetsratio from a high of 382.1 to 6.1 per cent.
1.4 In terms of indebtedness classification, the World Bank has categorised India as a less indebtedcountry since 1999. Among top fifteen debtor countries of the world, India improved its rank fromthird debtor after Brazil and Mexico in 1991 to ninth in 2000 after Brazil, Russian Federation,Mexico, China, Argentina, Indonesia, Korea Republic and Turkey. Among top fifteen debtorcountries, India’s external debt indicators such as short-term debt to total debt and short-term debtto forex reserve ratio are lowest and concessional to total debt ratio is highest, while debt to GNPratio is the second lowest after China in the year 2000.
1.5 Sustainable debt service obligations throughout the period and right monitoring of futuredebt servicing have strengthened the country to withstand the global debt crisis in early nineties andcontagion effect of economic turmoil in South East Asia during mid nineties. India’s debt servicepayments capacity substantially improved over time, which is evidenced from the steady decliningin debt service to current receipts and interest payments to current receipts ratios in the last decade.
1.6 Full computerization of sovereign external debt statistics has facilitated ready availabilityof historical data, future projections and MIS inputs for analysis, scenario building in the sovereigndebt management exercises. External debt outstanding on Government account has been reducedfrom US $ 41.6 billion at end-March 1997 to US $ 40.5 billion at end-December 2001, while totalsovereign external debt declined from US $ 49.0 billion to US $ 43.2 billion in the correspondingperiod.
1.7 The improvement in India’s external debt position since 1991-92 is attributed to Government’sinitiative to encompass policy issues that focuses on concentrating on concessional and less expensivedebt from multilateral and bilateral sources, keeping the maturity structure of the total external debtunder manageable limits, limiting short-term debt, prepaying more expensive external debt andencouraging non-debt creating financial flows on capital account and exports and invisibles oncurrent account. Prudent debt management strategy pursued during early nineties has resulted toplace India in comfortable external debt position.
2
1.8 The endeavor is on to improve the situation further by undertaking new initiatives such asincreased coverage and computerization of external debt statistics, better co-ordination amongagencies reporting debt data. Steps are also undertaken for refinancing of costly debts, prepaymentof certain high cost debt and availing some of financial products for hedging of risks for activemanagement of sovereign debt of the country.
1.9 Table 1.1 provides summary of external debt indicators for India since 1990-91 that manifestsignificant improvement over the period.
Table 1.1 : India – Key External Debt Indicators(ratios as per cent)
Year Debt Service to Total External Interest Payments Debt to CurrentCurrent Receipts# Debt to GDP## to Current Receipts# Receipts*
1990-91 35.3 28.7 15.5 328.9
1991-92 30.2 38.7 13.0 312.3
1992-93 27.5 37.5 12.5 323.4
1993-94 25.4 33.8 11.1 275.6
1994-95 25.9 30.8 10.0 235.8
1995-96 26.2 27.0 8.6 188.9
1996-97 23.0 24.5 8.0 169.6
1997-98 19.5 24.3 7.7 159.8
1998-99 18.9 23.6 7.6 162.1
1999-00 15.7 22.2 5.6 145.6
2000-01 R 15.4 22.3 4.8 126.2
2001-02 QE** 13.0 20.7 4.5 167.1
Short-term to Short-term to Short-term to Concessional to
Total Debt Assets GDP Total Debt
1990-91 10.2 382.1 3.0 45.9
1991-92 8.3 125.6 3.2 44.8
1992-93 7.0 98.5 2.7 44.5
1993-94 3.9 24.1 1.3 44.4
1994-95 4.3 20.5 1.3 45.3
1995-96 5.4 29.5 1.4 44.8
1996-97 7.2 30.1 1.8 42.3
1997-98 5.4 19.4 1.3 39.5
1998-99 4.4 14.5 1.0 38.5
1999-00 4.0 11.2 0.9 38.9
2000-01 R 3.5 8.8 0.8 36.0
2001-02 QE** 2.8 6.1 0.6 35.9
# : Figures for debt service and interest payments is calculated on cash payment basis except for Non-Resident Indian Deposits for whichaccrual method is used. The estimates may, therefore, differ from BOP data compilation methodology.
## : Debt-GDP ratios are derived from Rupee figures. GDP figures, at current market prices, are based on New Series of National AccountsStatistics, 2001 released by the Central Statistical Organization.
* : Current receipts excludes official transfers.
** : April- December 2001.
R. : Revised QE : Quick Estimates
3
1.10 Table 1.2 shows creditor wise external debt outstanding (quarterly) since March 2000.
Table 1. 2: External Debt Outstanding – Quarterly Position(end-period, US $ million)
Creditor Mar. Jun. Sep. Dec. Mar. Jun Sep DecCategory 2000 R 2000 R 2000 R 2000 R 2001R 2001 R 2001R 2001
QE
I. Multilateral 31,438 31,254 30,637 31,118 31,107 31,034 31,545 31,233II. Bilateral 18,175 17,870 17,218 16,945 15,947 15,820 16,560 15,338III. IMF 26 0 0 0 0 0 0 0IV. Export Credit 6,780 6,870 6,355 6,217 5,928 5,533 5,579 5,263V. Commercial Debt 19,943 19,418 19,430 24,483 24,111 23,859 23,649 23,798VI. NRI Deposits 13,559 14,094 14,553 15,188 15,414 15,729 16,164 16,834VII. Rupee Debt 4,406 3,887 3,761 3,789 3,717 3,249 3,248 3,190
A. Total Long-termDebt 94,327 93,393 91,954 97,740 96,224 95,224 96,745 95,656
B. Short-term Debt 3,936 4,183 4,438 3,589 3,480 3,141 3,107 2,751
Grand Total 98,263 97,576 96,392 101,329 99,704 98,365 99,852 98,407
Official Creditors 56.2 55.5 54.7 52.3 52.0 52.1 52.6 51.6
Private Creditors 43.8 44.5 45.3 47.7 48.0 47.9 47.4 48.4
* : The term official creditors here include Multilateral; Bilateral; IMF; Export Credit component of bilateral credit and for defencepurchases; and Rupee Debt.
R.. : Revised Estimates QE: Quick Estimates Note : Detailed quarterly outstanding debt position is provided in Annex 3 & 4.
4
2. External Debt
2.1 External Debt Stock:
2.1.1 India’s external debt stock stood at US $ 98.4 billion at end of December 2001 as against US$ 99.7 billion at end-March, 2001(Table 2.1). External debt of US $ 83.3 billion at end-March 1991gradually increased to US $ 99.0 billion at end-March 1995. It remained relatively stable aroundUS $ 93.5 billion for three years from end-March 1996 to end-March 1998 before increasing to US$ 96.9 billion at end-March 1999 and further to US $ 98.3 billion at the end of March 2000. However,the debt stock declined by 2.9 per cent at end of December 2001 compared to corresponding periodin previous year.
Table 2.1 : India’s External Debt Outstanding
End-March End-Dec.
1991 1992 1995 1998 1999 2000 2001R 2001QE*
(US Dollar million)
Long-term Debt 75,257 78,215 94,739 88,485 92,612 94,327 96,224 95,656
Short-term Debt 8,544 7,070 4269 5,046 4,274 3,936 3,480 2,751
Total External Debt 83,801 85,285 99008 93,531 96,886 98,263 99,704 98,407
(Rupees crore)
Long-term Debt 146,226 232,268 298,237 349,753 393,160 411388 448,832 461,163
Short-term Debt 16,775 20,642 13,448 19,929 18,137 17,162 16,229 13,255
Total External Debt 163,001 252,910 311,685 369,682 411,297 428,550 465,061 474,418
(ratio as per cent)
External Debt to GDP# 28.7 38.7 30.8 24.3 23.6 22.2 22.3 20.7
QE : Quick Estimate R.: Revised
* : End-December 2001 debt as ratios of GDP at current market price for 2000-01.
# : Debt-GDP ratios are derived from Rupee figures. GDP figures, at current market prices, for the years 1990-91, 1991-92 and 1992-93 are based on Old Series (Base: 1980-81) and figures from 1993-94 onwards are based on New Series (Base: 1993-94) of NationalAccounts Statistics released by the Central Statistical Organization.
2.1.2 Despite persistent decline in short-term external debt during the decade, growth of totaldebt may be attributed to increase in multilateral, bilateral (excluding IMF), commercial debt andlong-term NRI deposits. Estimates of increase in external debt between end-March 1991 to end-March 2001 at US $ 15.9 billion in dollar terms was the increase at an annual compound rate of 1.8per cent. However, the growth rate in rupee terms was higher at 11.0 per cent because of depreciationof rupee against major foreign currencies. Balance of Payments crisis in 1991 and structuraladjustment in subsequent three years have affected the estimates of annual growth rate to be higherbetween 1991-2001. Annual growth rate of external debt stock between end-March 1994 to end-March 2001, however, was estimated at 1.0 per cent in dollar terms and 6.9 per cent in rupee terms.
5
83.8
85.3
90
92.7
99
93.7 93.5 93.5
96.998.3
99.798.4
75
80
85
90
95
100
(US
$ b
illio
n)
Mar.1991 Mar.1992 Mar.1993 Mar.1994 Mar.1995 Mar.1996 Mar.1997 Mar.1998 Mar.1999 Mar.2000 Mar.2001 Dec.2001
Figure 2.1: India's External Debt Outstanding
Figure 2.2 :External Debt-GDP Ratio
28.7
38.737.5
33.8
30.8
27.024.5 24.3 23.6
22.2 22.320.7
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
Mar
.'199
1
Mar
.'199
2
Mar
.'199
3
Mar
.'199
4
Mar
.'199
5
Mar
.'199
6
Mar
.'199
7
Mar
.'199
8
Mar
.199
9
Mar
.200
0
Mar
.200
1
Dec.'2
001
(Per
cen
t)
2.1.3 Gross Domestic Product (GDP) at the current market prices increased at a high annualaverage rate of 13.9 per cent in the last decade, and as a result, the debt-GDP ratio declined steadilyfrom a peak of 38.7 per cent in 1991-92 to 22.3 per cent in 2000-2001 (Figure 2.2). The debt-GDPratio further declined to 20.7 per cent at end of December 2001.
6
2.2 International Comparisonsa) External Debt Stock:2.2.1 Among top ten debtor developing countries of the world in the last decade, India improvedits position to elevate its rank from third position after Brazil and Mexico in 1991 to eighth in 1995after Mexico, Brazil, Indonesia, Russian Federation, China, Thailand and Argentina. In the year2000, its comparative indebtedness position further improved to ninth after Brazil, RussianFederation, Mexico, China, Argentina, Indonesia, Korea Republic and Turkey (Table 2.2)
Table 2.2: International Comparison of Top Fifteen Debtor Countries, 2000
Sl. No. Country Total External Debt Debt to GNP (US $ billion) (ratio as per cent)
1 Brazil 238.0 41.82 Russian Federation 160.3 66.83 Mexico 150.3 26.94 China 149.8 14.15 Argentina 146.2 52.66 Indonesia 141.8 99.47 Korea Republic 134.4 29.58 Turkey 116.2 57.79 India 100.4 21.310 Thailand 79.7 66.111 Poland 63.6 40.512 Phillipines 50.1 63.113 Malaysia 41.8 50.714 Venezuela 38.2 3215 Chile 37.0 54.3
SAARC Countries 1 Pakistan 32.1 53.82 Bangladesh 15.6 33.33 Sri Lanka 9.1 55.45 Nepal 2.8 49.75 Bhutan 0.2 39.96 Maldives 0.2 39.3
Serial number 1 to 15 is the rank of the country in terms of total indebtedness.
Source: Global Development Finance, 2002, Country Tables, The World Bank.
2.2.2 Debt to GNP ratio, which shows the magnitude of external debt in relation to nationalincome, at 21.3 per cent in the year 2000 has placed India at the second lowest after China at 14.1per cent (Figure 2.3) as against third lowest in 1991 after Korea Republic and China. Among theSAARC countries, India’s Debt-GNP ratio was lowest in 1991, which continued to be lowest in theyear 2000 as well.
7
b) Change in Debt Stock:2.2.3 India, among the top fifteen debtor countries of the world, secured third in regards to increasein external debt stock at US $ 16.8 billion between 1990 to 2000, while during the period Venezuelaregistered the lowest increase in debt stock (US $5.0 billion) followed by Poland, India and Chile.Brazil accumulated the highest amount of debt stock of US $ 118.0 billion during the decade.Change in debt stock for top fifteen debtor countries of the world between 1990 to 2000 is depictedin Figure 2.4.
Figure 2.4 : Internationational comparison of change in External Debt Stockbetween 1990 and 2000.
5.014.216.8
17.8 19.526.5
45.951.6
66.8 71.9
84.0 94.599.4
101.0118.0
0.0
20.0
40.0
60.0
80.0
100.0
120.0
(US
$ billion)
Venezuela
Poland
India
Chile
Phillipines
Malaysia
Mexico
Thailand
Turkey
Indonesia
Argentina
China
Korea R
epublic
Russian F
ederation
Brazil
c) Present Value of External Debt:2.2.4 Since the composition of debt has comprehensive variations across the countries, Disbursedand Outstanding Debt (DOD), therefore, as measure of debt burden for international comparison ondebt levels of debtor countries, may not be a sound proposition. Some countries accrue high proportionof commercial debt while for others considerable amount of debt are received on concessionalterms. DOD norm aggregates all debt outstanding positions to arrive at gross debt disbursed and
Top fifteen debtor countries ordered by change in debt stock (assending order)Source: Global Development Finance, 2002, The World Bank
14.121.3
26.9 29.5 32.040.5 41.8
50.7 52.6 54.3 57.563.1 66.1 66.8
99.4
China
India
Mex
ico
Korea
Rep
ublic
Venez
uela
Poland
Brazil
Mala
ysia
Argen
tina
Chile
Turke
y
Phillip
ines
Thaila
nd
Russia
n Fed
erat
ion
Indo
nesia
Figure 2.3 International Comparison of Debt to GNP Ratio, 2000.
Note : Top fifteen top debtor counrties ordered by ratio of External Debt to GNP (assending order)Source : Global Development Finance, 2002, The World Bank.
(Per
cen
t)
8
outstanding and does not take into account of the degree of concessionality as an index ofindebtedness. Present Value (PV) concept is, therefore, considered as the useful measure ofindebtedness, which gives due weightage to share of concessional debt and is arrived at by discountingthe future stream of debt service payments for individual loans by appropriate discount rates andaggregating such PVs for all loans.
2.2.5 Among top fifteen debtor countries of the world, India enjoys highest amount of concessionaldebt (43.7 per cent of total debt) for which PV of external debt of India is arrived at US $ 70.9billion despite debt stock in absolute terms stood at US $ 100.4 billion in the same year. Consideringthe high degree of concessionality in India’s external debt, in terms of Present Value (PV), India isranked at tenth position (Table 2.3) among top fifteen debtor countries of the world even though itstood ninth in terms of total debt outstanding.
Table 2.3: International Comparison of Present Value (PV) and PV based ratios, 2000.
Srl. Country PV PV/XGS PV/GNP Indebtedness No. (US $ billion) (per cent) (per cent) Classification
1 Brazil 223.8 346 36 Severe2 Mexico 157.0 96 33 Less3 Argentina 155.0 425 55 Severe4 Russian Federation 148.1 154 64 Moderate5 Indonesia 135.0 212 111 Severe6 China 133.2 54 13 Less7 Korea Republic 128.4 70 33 Less8 Turkey 114.6 198 58 Moderate9 Thailand 76.6 100 66 Moderate10 India 70.9 105 16 Less11 Poland 58.1 128 37 Less12 Phillipines 50.8 109 67 Moderate13 Malaysia 42.9 43 57 Moderate14 Venezuela 38.7 139 37 Moderate15 Chile 34.9 163 51 Moderate SAARC Countries 1 Pakistan 26.6 247 45 Severe2 Bangladesh 9.6 120 21 Less3 Sri Lanka 7.0 98 44 Less4 Nepal 1.6 113 30 Less5 Bhutan 0.2 111 36 Less6 Maldives 0.1 32 32 Less
Indebtedness Benchmark
Either
PV/XGS>220 PV/GNP>80 Severe
Either
132<PV/XGS<220 48<PV/GNP<80 Moderate
Both
PV/XGS<132 PV/GNP<48 Less
Note: Serial Number 1 to 15 is the rank of the top 15 debtor countries ordered by PV of total debt service in 2000(descending order). Ratio ofPV of debt service to exports is the ratio of PV of debt service in 2000 to average exports (including workers’ remittances) in 1998, 1999 and2000. The ratio of PV of total debt service to GNP is the ratio of PV of total debt service in 2000to average GNP in 1998, 1999 and 2000.Source: Global Development Finance, 2002, Analysis and Summary Tables, The World Bank.
9
d) Indebtedness Classification:2.2.6 The World Bank classifies developing economies into three broad categories, i.e., severely,moderately and less indebted countries by relating Present Value (PV) to Gross National Product(GNP) and Export of Goods and Services (XGS). These three terms are used because PV takes intoaccount the degree of concessionality as the index of indebtedness while GNP is considered as abroad measure of income generation in an economy and XGS provides foreign exchange to servicedebt. The indebtedness is classified based on the ratio of Present Value of total debt service toexports of goods and services and Present Value of total debt service to GNP. If either ratio exceedsa critical value i.e. 220 per cent for PV of debt service to exports and 80 per cent for PV of total debtservice to GNP – the country is classified as severely indebted. If the critical value is not exceededbut either ratio is three-fifths or more of the critical value (that is, 132 per cent for the PV of debtservice to exports and 48 per cent for PV of total debt service to GNP), the country is classified asmoderately indebted. If both the ratios are less than three fifths of their respective critical value, thecountry is classified as less indebted.
2.2.7 Based on the World Bank’s classification, Table 2.4 provides an international comparisonof indebtedness classification of the top fifteen debtor countries. Brazil, Argentina and Indonesiaare classified as severely indebted countries. Moderately indebted countries include RussianFederation, Turkey, Thailand, Philippines, Malaysia, Venezuela and Chile. On the other extreme,while Mexico, Korea, China, and Poland are classified as less indebted countries, India also joinedthis category of a less indebted country in the year 1999.
External Indebtedness Indicators for IndiaFigure 2.5: PV/XGS Ratio for India during 1994-2000
152 151 147
114
191214
105
0
50
100
150
200
250
1994 1995 1996 1997 1998 1999 2000
Source : Global Development Finance, Various Issues, The World Bank
220
132
Less indebted
Moderately Indebted
Severely Indebted
2.2.8 Up gradation of India to less indebted country category in 1999 from a moderately indebtedcountry, is a result of the considerable improvement in its indebtedness position during the lastdecade. Figure 2.5 shows the improvement in the ratio of PV of debt service to exports of goodsand services between 1994 and 2000. Thus, while the ratio in 1994 at 214 per cent was close to theseverely indebted benchmark of 220 per cent; it improved thereafter, and till 1998 remained abovethe less indebted benchmark of 132 per cent. In 1999, the ratio pierced below the less indebtedbenchmark and stood at 114 per cent, which further improved to 105 per cent in2000. In terms ofPV of debt service to GNP, the ratio has been well below the less indebted benchmark of 48 per cent(Figure 2.6). The ratio has also been improving over the years, declining from 26 per cent in 1994to 16 per cent in 2000. The present trend of moderately high growth in GNP and exports is expectedto further consolidate India’s indebtedness position within the less indebted category.
Per
cen
t
10
Figure2. 6: PV/GNP Ratio for India during 1994-2000
26 25 22 21 20 18 16
0
10
20
30
40
50
60
70
80
90
1994 1995 1996 1997 1998 1999 2000Source : Global Development Finance, Various Issues, The World Bank
Per
cen
t
48
80
Less Indebted
Moderately Indebted
Severely Indebted
2.2.9 International comparison on indebtedness classification between 1995 and 2000 among topfifteen debtor countries of the world reveals that India and Poland elevated their position frommoderate to less indebtedness category while Mexico from severe to less indebtedness benchmark.Indebtedness deteriorated in respect of Indonesia, Thailand and Malaysia during the period whilerest of the countries maintained their indebtedness position.
Table 2.4 : International Comparison on Indebtedness Classification, 2000
Sl. No. Country 2000 1999 1995
1 Brazil Severe Severe Severe2 Mexico Less Less Severe3 Argentina Severe Severe Severe4 Russian Federation Moderate Moderate Moderate5 Indonesia Severe Severe Moderate6 China Less Less Less7 Korea Republic Less Less Less8 Turkey Moderate Moderate Moderate9 Thailand Moderate Moderate Less10 India Less Less Moderate11 Poland Less Less Moderate12 Phillipines Moderate Moderate Moderate13 Malaysia Moderate Moderate Less14 Venezuela Moderate Moderate Moderate15 Chile Moderate Moderate Moderate
SAARC Countries 1 Pakistan Severe Severe Moderate 2 Bangladesh Less Moderate Moderate 3 Sri Lanka Less Less Less 4 Nepal Less Less Less 5 Bhutan Less Less Less 6 Maldives Less Less Less
Note: Serial Number 1 to 15 is the rank of the top 15 debtor countries ordered by PV of total debt service in 2000(descending order).
Source: Global Development Finance, Various Issues, The World Bank.
11
2.2.10 Among the SAARC countries, Pakistan, which was classified as moderately indebted countryin 1995, has deteriorated to severely indebted benchmark in 1999 and 2000. On the contrary,Bangladesh improved its position from moderately indebtedness in 1995 and 1999 to less indebtedbenchmark in2000. Other countries namely Nepal, Bhutan, Sri Lanka and Maldives have maintainedtheir less indebtedness benchmark from 1995 to 2000 (Table 2.4 ).
e) Harmonizing External Debt Reporting :
2.2.11 The debt numbers published/released by BIS, CS, Euro stat, IMF, OECD, Paris clubSecretariat, UNCTAD and World Bank reveal wide differences. This is mainly because of differencesin conceptual difference in definitions, data collection sources, techniques of compilation and useof different debt recording systems.
2.2.12 As a first step in this direction, a Permanent Technical Group for Reconciliation of externaldebt statistics with International agencies was constituted in India in 1999, pursuant torecommendation of Monitoring Group on External Debt in its meeting held on 25th September,1999.
2.2.13 Reconciliation of India’s External Debt database with World Bank Debtor Reporting System(DRS) database, which forms basis for Global Development Finance, was identified as a key areain this effort. Since in India, we have a comprehensive external debt database for both SovereignExternal Debt and External Commercial Borrowing, which accounts for nearly 70% of the aggregateexternal debt, a comprehensive effort to update World Bank DRS with that of India data wasundertaken. As a first step, reconciliation of two CS-DRMS database maintained by AA&AD for(Sovereign External Debt) and the other by Reserve Bank of India, DESACS for ECB loans, wascompleted at two different locations in India. The reconciliation exercise was mainly aimed atensuring adoption of unique loan keys by respective sites (AA&AD & DESACS) of CS-DRMS soas to avoid duplication etc. and to achieve standardization in coding structure. Utilities weredeveloped to enable reporting of single data set by India to the World Bank. Based on the mergeddata sent electronically to World Bank, World Bank DRS database has been updated and reconciledwith India’s external debt database as on 31.03.2001.
2.2.14 With a view to further refine the issues of coverage and measurement of external debt,keeping in view various developments since recommendation of Technical group in May 1998 likefull convertibility of non-resident deposits from 01.04.2002, need for information on financialderivatives, treatment of domestic debt held by non-residents, quantification of short terms debt upto 180 days etc. a Technical Group is proposed to be constituted.
2.3 Per capita External Debt
2.3.1 Per capita external debt of India was US $ 97.8 in 2000-01 as against US $ 99.88 in 1990-91. During the period from 1992-93 to 1995-96, it exceeded US dollar 100. In the decade, annualaverage increase in external debt stock was 1.8 per cent as against corresponding population growthof 2.0 per cent. Per capita external debt of India from 1990-91 to 2000-01 in US $ and rupee termsare given in Table 2.5.
12
Table 2.5 : Per Capita External Debt of India - 1990-91 to 2000-01
Year External Debt External Debt Population * Per capita external debt (Rs. Crore) (US $ million) (Million) (US Dollar) (Rupees)
1990-91 163,001 83,801 839 99.88 1,9431991-92 252,910 85,285 856 99.63 2,9551992-93 280,746 90,023 872 103.24 3,2201993-94 290,418 92,695 891 104.03 3,2591994-95 311,685 99,008 908 109.04 3,4331995-96 320,728 93,730 927 101.11 3,4601996-97 335,827 93,470 943 99.12 3,5611997-98 369,682 93,531 959 97.53 3,8551998-99 411,297 96,886 975 99.37 4,2181999-00 428,550 98,263 1001 98.16 4,3242000-01 465,061 99,704 1019 97.84 4,564
* Relates to Mid Financial Year
2.3.2 Figure 2.7 gives a chronological picture of per capita external debt of India in US Dollarfrom 1990-91 to 2000-01. The per capita external debt, which has crossed US $ 100 mark during1992-93 to 1995-96 slowly declined to reach US $ 97.84 in 2000-01 that was even less than that ofthe per capita external debt level of 1990-91.
Figure 2.7 Per capita External Debt of India- 1990-91 to 2000-01
90.00
92.00
94.00
96.00
98.00
100.00
102.00
104.00
106.00
108.00
110.00
(US
Dol
lar)
1998-99 99.88 99.63 103.24 104.03 109.04 101.11 99.12 97.53 99.37 98.16 97.84
1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01
13
3. Short-term Debt
3.1 Short-term Debt by Original Maturity3.1.1 The Short term-debt component in external debt plays a critical role and high amount of itmay make BOP of a country vulnerable and can make a country susceptible to a sudden loss offinancial market confidence as the borrower faces refinancing/rollover risk. Short-term liabilitiesconstitute contractual obligation and during time of crisis countries like India, with restricted accessto international capital market, may face financial turbulence if the maturity structure of the debt or“bunching” of debt repayments leads to a concentration of payment obligations in a relatively shortperiod. Prudent external debt management, therefore, aims at avoiding excessive built up of short-term debt relative to foreign exchange reserves.
3.1.2 In general, short-term debt includes:(i) trade credits (buyers’ credits of all maturities andsuppliers’ credits beyond 180 days and up to one year) and (ii) NRI deposits of original maturityless than one year. Table 3.1 shows components of short-term external debt. In India short-termdebt was as large as US 8.5 billion at end-March 1991, which steadily declined to US$ 3.5 billion atend-March 2001 and further, to US$ 2.8 billion at end-December, 2001.
Table 3.1: Short-term Debt by Original Maturity(US $ million)
Short-term End-March End-Debt Dec.
Components
1991 1993 1995 1998 1999 2000R 2001R 2001QE
NRI Deposits1 3577 2603 2278 2192 2086 1372 809 917FC(B&O)D2 167 779 0 0 0 0 0 0Trade Credits3: 4800 2958 1991 2854 2188 2564 2671 1834Total 8544 6340 4269 5046 4274 3936 3480 2751
1 : Short-term external debt components of NRI Deposits comprised of Foreign Currency Non-Resident Accounts, [FCNR(A)]; ForeignCurrency Non-Resident Bank Deposits, [FCNR(B)]; and Non-Resident External Rupee Account [NR(E)RA]. At the end of March 2001,deposits of less than one year maturity on Non-Resident External Rupee Account, [NR(E)RA] is the only short-term external debtcomponent under NRI deposit scheme that is available for investment by NRIs. Short-term deposits of less than one-year maturity onForeign Currency Non-Resident Accounts, [FCNR(A)], were withdrawn from May 15, 1993. Short-term deposits with a maturity of lessthan one year of Foreign Currency Non-Resident Bank Deposits, [FCNR(B)], were withdrawn effective from October 1999.
2 : Short-term deposit scheme of Foreign Currency (Banks and Others) Deposits was discontinued from July 1993.
3 : Data on short-term trade credit of less than six months in respect of suppliers’ credit are not available since end-March 1994.
QE: Quick Estimates R: Revised.
3.1.3 Careful monitoring of short-term debt in India has resulted in a structural change in thecomposition of short-term debt. Policy induced shift from foreign currency dominated non-residentdeposits and de-emphasis of short term foreign currency denominated deposits has resulted in declineof short term non-resident deposits from US$ 3.6 billion at end-March 1991 to US$ 0.9 billion atend-December, 2001. Trade related credits are restricted within prudential limits by imposing annualceiling as well as overall cap on outstanding.
3.1.4 Policy thrust to limiting short-term debt, therefore, has induced the liquidity indicators basedon short-term debt ratios to improve in 1990s. The ratio of short-term to total external debt, thus,improved from a high of 10.2 per cent at end-March 1991 to 2.8 per cent at end-December, 2001.Short-term debt as a ratio of foreign currency assets has also considerably improved over time.From a high of 382.1 per cent at the end of March 1991, the ratio drastically declined to 6.1 per centat end of December 2001. Thus, by all criteria, India’s short-term debt is considered as modest.
14
3.1.5 Figure 3.2 provides comparative position of the proportion of short-term to total externaldebt for the top fifteen debtor countries at the end of 2000.It is witnessed from the Figure 3.2 thatthe share of short-term at 3.5 per cent of total debt is the lowest for India. Similarly, short-term debtto forex reserve ratio for India at 8.4 per cent is also the lowest among top fifteen debtor countriesat the end of 2000 (Figure 3.3).
3.5
4.6
6.8
9.7
11.1
11.2
11.5
11.9
12.6
13.0
16.0
18.7
19.4
24.9
30.1
0 5 10 15 20 25 30 35
India
Chile
Malaysia
China
Mexico
Indonesia
Argent ina
Korea Republic
(Per
cen
t)
Note: Top fifteen Debtor Countriesordered by ratios of Short-term to total External Debt (descending order)Source: Global Development Finance, 2002, Country Tables, The World Bank.
Figure 3.2 : International comparison- Proportion of short-term toTotal External Debt, 2000.
Figure 3.1 : Short-term Debt Ratios(end-March period)
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
Short-term to Total Debt Ratio 10.2 8.3 7.0 3.9 4.3 5.4 7.2 5.4 4.4 4.0 3.5 2.8
Short-term Debt to Forex Asset Ratio 382.1 125.6 98.5 24.1 20.5 29.5 30.1 19.4 14.5 11.2 8.8 6.1
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001Dec.'2001
(Per
cen
t)
(Per
cen
t)
Figure 3.3: International comparison-Proportion of Short-term Debt to Reserves, 2000
8.4
10.0
11.1
15.5
17.2
25.9
39.6
42.0
45.6
53.2
56.2
77.1
93.8
112.6
123.0
0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0
India
China
Venezuela
Malaysia
Chile
Poland
Phillipines
Korea Republic
Thailand
Mexico
Russian Federation
Indonesia
Brazil
Argentina
Turkey
Top fifteen debtor countries ordered by ratio of Short-term Debt to forex reserves (descending order) Source: Global Development Finance, 2002, Country Tables, The World Bank.
F i g u r e 3 . 2 : I n t e r n a t i o n a l c o m p a r i s o n - P r o p o r t i o n o f s h o r t - t e r m t o T o t a l E x t e r n a l D e b t , 2 0 0 0 .
3 .5
4 .6
6 .8
9 .7
11 .1
11 .2
11 .5
11 .9
12 .6
13.0
16 .0
18.7
19.4
24 .9
30 .1
0 5 1 0 15 2 0 25 3 0 3 5
I nd ia
V e n e z u e l a
Ch i l e
R u s s i a n F e d e r a t i o n
M a l a y s i a
P o l a n d
C h i n a
Ph i l l i p i nes
M e x i c o
Braz i l
I n d o n e s i a
T h a i l a n d
A r g e n t i n a
T u r k e y
K o r e a R e p u b l i c
(Per
cen
t)
Note : Top f i f teen Debtor Count r iesordered by ra t ios o f Shor t - te rm to to ta l Ex te rna l Debt (descend ing o rder )Sou rce : G loba l Deve lopmen t F inance , 2002 , Coun t r y Tab les , Wor ld Bank .
Figure 4.1 Internationational comparison-Proportion of concessional Debt to Total External Debt
0.2
0.2
0.8
0.9
1.0
1.1
1.2
4.3
5.4
10.7
11.9
18.7
21.3
24.8
43.7
0 5 10 15 20 25 30 35 40 45 50
Russian Federation
Venezuela
Mexico
Brazil
Chile
Korea Republic
Argentina
Turkey
Malaysia
Poland
Thailand
China
Indonesia
Phillipines
India
Per cent Note: Top fifyteen Debtor countries ordered by ratio of Concessional Debt to Total Debt (descending order) Source: Global Development Finance, 2002, Country Tables, The World Bank.
15
8.410.011.1
15.517.2
25.939.6
42.045.6
53.256.2
77.193.8
112.6123.0
0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0
India
Venezuela
Chile
Phillipines
Thailand
Russian Federation
Brazil
Turkey
3.2 Short-term Debt by Residual Maturity3.2.1 After East Asian crisis, it has been an accepted practice to monitor short-term debt by residualmaturity. In the gross external debt position, long-term debt obligations falling due within a year,which being contractual obligations, are similar to the short-term maturity obligation for the particularyear. So, the short-term debt by original maturity of up to one year, combined with medium andlong-term debt by original maturity falling due within the twelve-month period following a referencedate constitute short-term debt by residual maturity.
Table 3.2 : External Debt by Residual Maturity up to One Year(US Dollar million)
External Debt by Residual Maturity 1997 1998 1999 2000 2001 R 1999 2000 2001
(up to one year) QE
End-March End-December
1. Short-term debt byoriginal maturity 6,726 5,046 4,274 3,936 3,480 4,256 3,589 2,751
2 Long-term debt obligationsmaturing within one year 6,9011 6,7231 7,0592 8,3173 6,5354 7,2304 6,5584 6,2874
3. External debt by residualmaturity up to 1 year (1+2) 13,627 11,769 11,333 12,253 10,015 11,486 10,147 9,038
Per cent of GDP 3.5 2.9 2.7 2.8 2.2 2.6 2.2 1.9Per cent to Total Debt 14.6 12.6 11.7 12.5 10.0 11.7 10.0 9.2Per cent to Foreigncurrency Assets 60.9 45.3 38.4 34.9 25.3 35.9 27.2 20.0
1 : Estimates of long-term debt maturing within one year as on March 31, 1997, and March 31, 1998 are taken as actual principalrepayments on long-term debt obligations during 1997-98 and 1998-99 respectively.
2 : For estimates on March 31, 1999, the actual principal repayments in the first three-quarters of 1999-00 (i.e. Apr.1-Dec.31, 1999)together with available projections for the fourth quarter, (i.e. Jan. 1-Mar. 31, 2000) is taken as long-term maturing obligations during1999-00.
3 : For estimates on March 31, 2000, the projected principal repayments based on long-term debt outstanding as on end-December 1999is taken as long-term maturing obligations during 2000-01.
4 : Available projections based on long-term debt outstanding as on end-March 2001 is taken as long-term debt maturing during 2000-01. Similarly, available projections for the calendar year 1999, 2000 and 2001 are taken as long-term debt obligations maturingwithin one year as on December 31, 1998, 1999 and 2000 respectively.
Note : Thus, estimates of long-term debt obligations maturing within one year for March 31, 1997 to 1999 have been calculated on a postfacto basis for the entire year (1) or first three quarters (2), and could include repayments arising out of prepayment. Accordingly,estimates for the above years could have an upward bias.
QE : Quick Estimates R : Revised
Top fifteen Debtor Countries ordered by ratios of Short-term Debt to Forex Reserves (descending order) Source: Global Development Finance,2002, Country Tables, The World Bank.
Figure 3.3 : International comparison-Proportion of Short-term Debt to Reserves, 2000.
16
3.2.2 This concept provides an indication of long-term debt obligations due in the near term ofwithin a year and in the process a country may avoid potential liquidity risks arising out of bunchingof repayments, large payments due in the short run. This becomes a supplementary measure formonitoring liquidity requirements and is important for overall external debt management of thecountry. Prudent debt management, therefore, requires to address long-term payments obligationsdue in the short period of within a year along with limiting the short term debt by original maturityat manageable levels by considering analytical aspect of residual maturity measures.
3.2.3 Estimate of short-term debt by residual maturity for India is given in Table3.2. The short-term debt by residual maturity declined from US $ 13.6 billion from end-March 1997 to US $ 10.0billion at end-March 2001 and further to US $ 9.0 billion at end of December 2001. The decline wasby US $ 1.1 billion to US $ 9.0 billion at end-December 2001 corresponding to end-December2000. As per cent to total debt, short-term debt by residual maturity declined from 14.6 per cent atend-March 1997 to 9.2 per cent at end of December 2001. The proportion of short-term debt toforeign currency asset also declined from a high of 60.9 per cent from end-March 1997 to 20.0 percent at end-December 2001. The improvement is also seen in Short-term debt by residual maturityto GDP ratio (Figure 3.4).
Figure 3.4 : Ratios of Short-term Debt by Residual Maturity
(Per cent)
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
(as per cent of GDP) 3.5 2.9 2.7 2.8 2.2 1.9
(as per cent to forex assets) 60.9 45.3 38.4 35.0 25.3 20.0
(as per cent to total debt) 14.6 12.6 11.7 12.5 10.0 9.2
Mar.'1997 Mar.'1998 Mar.1999 Mar.2000 Mar.2001 Dec.'2001
17
4. Classification of Debt Stock
External debt data are compiled in terms of both creditor and borrower categories and the debtstock is also classified by consessionality. Since last decade, the composition of India’s externaldebt has shown a structural change on account of decline in share of concessional debt, which ismainly attributed to gradual shrinking in share of official creditors and share of Government debt intotal debt, most of which were on concessional terms.
4.1 Creditor Classification
4.1.1 Table 4.1 provides creditor-wise breakdown of India’s external debt. At the end of December2001, the total multilateral (excluding IMF) debt at US $ 31.2 billion accounted for 31.7 per cent ofthe total external debt as against 24. 9 per cent at end-March 1991.The share remained steadyaround that level since end-March 1996. Share of bilateral debt (excluding rupee debt) in totalexternal debt, declined from 20.5 per cent at end-march 1995 to 15.6 per cent at end of December2001.While debt from IMF was fully liquidated by end-March 2001, rupee dominated debt, sourcedmainly from Soviet Union also declined from US $ 12.8 billion from end-March 1991 to US $ 3.2billion at the end of December 2001. Accordingly, the share of official debt in total debt, whichincludes multilateral, bilateral, IMF, export component of bilateral credit and for defence purchasesand rupee debt has been decelerating in recent years from 63.5 per cent at end-March 1991 to 51.6per cent at end-December 2001.This envisages that in recent years, share of private creditors intotal external debt has considerably enhanced from 36.5 per cent at end-March 1991 to 48.4 percent at end-December 2001. Commercial debt in the private creditors has registered a steep increasefrom 12.2 per cent at end-March 1991 to 24.2 per cent at end-December 2001.
Table 4.1 : External Debt Outstanding by Creditor Categories
End-March End-
Dec.
1991 1992 1995 1997 1999 2000 R 2001 R 2001QE
(US Dollar million)
I. Multilateral 20900 23090 28542 29218 30534 31438 31107 31233
II. Bilateral 14168 15466 20270 17494 17499 18175 15947 15338
III. IMF 2623 3451 4300 1313 287 26 0 0
IV. Export Credit 4301 3990 6629 5861 6789 6780 5928 5263
V. Commercial Debt 10209 11715 12991 14335 20978 19943 24111 23798
VI. NRI Deposits # 10209 10083 12383 11012 11794 13559 15414 16834
VII. Rupee Debt 12847 10420 9624 7511 4731 4406 3717 3191
A. Total long term debt 75257 78215 94739 86744 92612 94330 96224 95656
B. Short-term Debt 8544 7070 4269 6726 4274 3936 3480 2751
Grand Total 83801 85285 99008 93470 96886 98263 99704 98407
(percentage of total debt)
i) Share of officialcreditors*
63.5 64.3 66.0 60.9 56.0 56.2 52.0 51.6
ii) Share of private
creditors
36.5 35.7 34.0 39.1 44.0 43.8 48.0 48.4
# : NRI Deposits include FC(B&O) Deposits till end-March 1997.* : The term official creditors here include Multilateral, Bilateral, IMF, Export Credit component of bilateral credit and for defence
purchases; and Rupee Debt.QE : Quick Estimates R: Revised
18
4.2 Concessional Debt4.2.1 In compilation of India’s external debt data, a “creditor classification” approach for classifyingdebt into concessional and non-concessional categories is followed. Thus, debt from somemultilateral institutions such as IDA, International Fund for Agriculture Development (IFAD), andOrganization of Petroleum Exporting Countries (OPEC), which have long maturity and relativelylow interest are treated as concessional. The loans from some other multilateral sources, such asthe IBRD, ADB etc., however, are on terms close to market rates and are, therefore, classified asnon-concessional. All Government borrowings from bilateral sources (except dollar denominateddebt from Russia) are classified as concessional. Rupee debt, which is serviced through exports, isalso treated as concessional. Table 4.2 gives the share of concessional debt in total external debt ofthe country.
Table 4.2 : Share of Concessional Debt(end-period)
March Dec.1991 1992 1995 1997 1999 2000 2001 R 2001QE
(US Dollar billion)
Concessional debt 38.43 38.19 44.85 39.49 37.26 38.21 35.86 35.32Total ExternalDebt
83.80 85.29 99.01 93.47 96.89 98.26 99.70 98.41
(per cent )Concessional debtas share of totaldebt
45.9 44.8 45.3 42.3 38.5 38.9 36.0 35.9
Note : A creditor classification approach is used for classifying debt as concessional.QE : Quick Estimates R: Revised
4.2.2 The proportion of concessional debt in total debt, which was around 45 per cent during firsthalf of 1990s declined to 38.9 per cent at end-March 2000. It further declined to 35.9 per cent atend-December 2001.
4.2.3 Despite the declining trend, India’s share of concessional debt continues to be high byinternational standards. Figure 4.1 shows that India’s share of concessional debt to total debt at 43.7per cent was the highest among fifteen top debtor countries at end of 2000 followed by Philippinesat 24.8 per cent.
Figure 4.1 : Internationational Comparsion-Proportion of Concessional Debt in Total External Debt, 2000.
0.20.20.80.91.01.11.2
4.35.4
10.711.9
18.721.3
24.843.7
0 5 10 15 20 25 30 35 40 45 50
Russian Federation
Mexico
Chile
Argentina
Malaysia
Thailand
Indonesia
India
(Per cent)
Note : Top fifteen Debtor Countries ordered by ratio of Concessional Debt to Total Debt (descending order) Source: Global Development Finance, 2002, Country Tables, The World Bank
19
4.3 Borrower classification
4.3.1 Total external debt of Government (defined here to include multilateral and bilateralborrowing on Government Account from external assistance, IMF, FII investment in Governmentdebt securities and Rupee debt components) stood at US $ 43.2 billion at the end of December 2001(Table 4.3). The share, which was about 60 per cent of the total external debt during the first half ofthis decade, began to fall gradually since end-March 1995 and stood at 44.2 per cent at end-March2001. The share further declined to 43.9 per cent at the end of December 2001. Decline in bilateral,IMF and Rupee denominated debt along with a steady increase in private debt are some of thecontributory factors for the fall in the share of government debt.
Table 4.3 : External Debt by Borrower Classification
End-March End-
Dec.
1991 1992 1995 1998 1999 2000 2001R 2001QE
(US Dollar million)
I. Govt. Debt 49957(59.6)
51027(59.8)
59502(60.1)
46520(49.7)
46137(47.6)
46852(47.7)
44027(44.2)
43196(43.9)
Of which long-term : 49957 51027 59502 46520 46137 46852 44027 43196
1. Govt. A/c. 33744 36739 45293 40805 41896 42823 40727 40452
2. Other Govt. Debt 16213 14288 14209 5715 4241 4029 3300 2744
II. Non-Govt. Debt 33844(40.4)
34258(40.2)
39506(39.9)
47011(50.3)
50749(52.4)
51414(52.3)
55677(55.8)
55211(56.1)
A. Of which long-term : 25300 27188 35237 41965 46475 47478 52197 52460
1. Financial Sector* - - - 20113 23699 25105 29726 30711
2 Public Sector** - - - 9753 9284 9316 10328 9385
3 Private Sector*** - - - 12099 13492 13057 12143 12364
B. Of which short-term : 8544 7070 4269 5046 4274 3936 3480 2751
III. Total External Debt 83801(100)
85285(100)
99008(100)
93531(100)
96886(100)
98263(100)
99704(100)
98407(100)
Note : The definition of Government debt here includes debt on Government Account maintained by the Controller of Aid Accounts andAudit, Ministry of Finance. Other Government debt include IMF, Defence Debt and FII investment in Government debt securities.All others, including short-term debt are shown as part of non-Government debt. Debt of Defence public sector enterprises isincluded as part of non-Government debt from 1996 onwards.
* : Financial sector debt represent borrowings by external debt of banks and financial institutions. Long-term NRI Deposits are includedin the Financial Sector.
** : Public sector debt represents borrowings of non- financial public sector enterprises.
*** : Private sector debt represents borrowings of non- financial private sector enterprises.
QE : Quick Estimates R. : Revised.
Figures in parentheses represent share of components in total external debt.
4.3.2 Table 4.3 also provides (since end-March 1998) the break up of long-term non-Governmentdebt into financial, public and private sectors. The financial sector, which borrows for on-lendingpurposes, accounted for 22.7 per cent of the total long-term debt at end-March 1998, with the shareincreasing to 32.1 per cent at end-December 2001. The increase in the overall share of debt of thefinancial sector could be attributed to the recent bond issuance like India Millenium Deposits of US$ 5.52 billion in November 2000 and Resurgent India Bonds of US $ 4.23 billion in August 1998.Consequently, the share of non-financial sector debt stock declined from 24.7 per cent of the totallong-term debt in end-March 1998 to 22.7 per cent in end-December 2001. Within the non-financialsector, debt of both the private and public sector remained relatively stable between US $ 12-13billion and US $ 9-10 billion respectively.
20
4.4 Instrument-wise classification4.4.1 Table 4.4 below shows an instrument-wise classification on end-December 2001 debtoutstanding for borrowers like Central Government, financial sector, and public sector and privatesector enterprises from non-financial sector. Detailed break-up is also provided with respect tocreditor category classification like multilateral, bilateral, IMF, export credit, commercial borrowings,NRI deposits and rupee debt.
Table 4.4: Instrument-wise Classification of Long-term External Debt Outstanding(as on end-December 2001)
(US $ million)
Borrower Creditor INSTRUMENTS
Bonds &
Notes LoansTradeCredit Deposits Total
I Government: 96 42088 1012 0 43196 1 Multilateral 0 27611 0 0 27611 2 Bilateral 0 11665 0 0 11665 3 IMF 0 0 0 0 0 4 Export Credit 0 0 1012 0 1012 5 Commercial 96 0 0 0 96 6 Rupee Debt 0 2812 0 0 2812 II Financial Sector: 10482 3395 0 16834 30711 1 Multilateral 0 755 0 0 755 2 Bilateral 0 1279 0 0 1279 3 Export Credit 0 117 0 0 117 4 Commercial 10482 1244 0 0 11726 5 NRI Deposits 0 0 0 16834 16834 III Non-Financial Public Sector: 1075 8181 129 0 9385 1 Multilateral 0 2585 0 0 2585 2 Bilateral 0 1460 0 0 1460 3 Export Credit 0 858 129 0 987 4 Commercial 1075 2900 0 0 3975 5 Rupee Dept 0 378 0 0 378 IV Non-Financial Private Sector: 1629 9852 883 0 12364 1 Multilateral 0 281 0 0 281 2 Bilateral 0 935 0 0 935 3 Export Credit 0 2266 883 0 3149 4 Commercial 1629 6370 0 0 7999 V Total Long-Term Debt: 13282 63516 2024 16834 95656 1 Multilateral 0 31232 0 0 31232 2 Bilateral 0 15339 0 0 15339 3 IMF 0 0 0 0 0 4 Export Credit 0 3241 2024 0 5265 5 Commercial 13282 10514 0 0 23796 6 NRI Deposits 0 0 0 16834 16834 7 Rupee Debt 0 3190 0 0 3190
4.4.2 Government external borrowing is heavily dominated by loans, constituting 97.4 per cent ofits total long-term debt stock as on end-December 2001 (Figure 4.2). On the other hand, for thefinancial sector, more than half of its outstanding long-term external debt is in the form of non-resident deposits. Use of securitized borrowing instruments like loans and bonds and notes for thefinancial sector have near even distribution with the shares at 34.1 per cent and 11.1 per centrespectively. Within the non-financial sector, public sector enterprises showed a heavy reliance onloan instruments, accounting for 87.2 per cent of their total debt outstanding as at end-December
21
2001. The share of other instruments in external debt of the public sector debt stood at 1.4 per centfor trade credits and 11.5 per cent for bonds and notes. Reliance on loan instruments by privatesector was lower than public sector, accounting for 79.7 per cent of their total debt stock.
Figure 4.2 Composition of Instruments in Long-term External Debt by Borrower Category
0.2
97.4
2.30.0
34.1
11.10.0
54.8
11.5
87.2
1.40.0
13.2
79.7
7.10.0
13.9
66.4
2.1
17.6
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
(Per
cen
t)
Government Financial Sector Non-FinancialPublic Sector
Non-FinancialPrivate Sector
Total Long-termDebt
Bonds & Notes Loans Trade Credit Deposits
4.4.3 As a proportion of the total long-term debt outstanding as at end-December 2001, loansaccounted for as much as 66.4 per cent, followed by deposits at 17.6 per cent, bonds and notes at13.9 per cent and trade credits at 2.1 per cent.
4.5 Currency composition4.5.1 The currency composition of India’s external debt is weighed in favour of the US dollar.The share of US dollar has also increased over the years and accounted for 55 per cent of the totaldebt at the end of December 2001 as against 41.4 per cent at end-March 1994. Table 4.5 providescurrency-wise exposure at end-March 1994 (earliest year for which disaggregated currency-wisedata are available) and till end-December 2001. Other important currency components are SpecialDrawing Rights (SDR), Rupee denominated debt, Japanese Yen, Euro area currencies and PoundSterling which together with the US dollar account for over 96 per cent of the total debt.
Table 4.5 Currency Composition of External Debt(Per cent of total External Debt)
Currency End-March 1994 End-March 2000 End-March 2001R End-Dec.2001 QE
US Dollar $SDRIndian RupeeJapanese YenDeutsche MarkFrench FrancNetherlandsEuro*Pound SterlingCanadian DollarOthers
41.414.914.813.76.31.81.1
-3.30.72.0
51.413.211.612.7
---
6.92.90.50.8
55.513.011.09.9
---
6.72.90.50.5
55.013.711.79.9
---
5.83.00.50.4
Total 100.0 100.0 100.0 100.0
$ : US Dollar share has an upward bias because IBRD and ADB pooled loans are accounted here as US Dollar loans.• : Euro includes currency denominated in Euro and Euro area currencies.R : RevisedQE : Quick Estimates
22
Figure 4.3 : Currency Composition of India's External Debt at End-December 2001 (In Per cent)
55.0
13.7
11.7
9.9
5.8 3.0 0.5 0.4
1 2 3 4 5 6 7 8
1. US Dollar 2. SDR 3.Indian Rupee 4. Japanese Yen
5. Euro 6. Pound Sterling 7. Canadian Dollar 8. Others.
23
5. Debt Service
5.1 Debt Service Payments
5.1.1 Maintaining sustainable debt service payment is a vital aspect in debt managementoptions. Since beginning and even during financial crisis in 1990s, India, as a sovereign country,has maintained its debt service obligations. This has contributed in withstanding the effect ofglobal contagion during 1997-1999.
5.1.2 Debt Service Payments1 peaked in 1995-96 at US$ 13.0 billion. Since then the debtservice has been maintained steadily to reach US $ 12.1 billion in 2000-2001. Prior to 1995-96, therange of debt service payments varied between US $ 8 to 10 billion per year. During the lastdecade, debt service payment has increased from US $ 8982 million from 1991 to US $ 12139million in 2000-01. The annual average growth rate of debt service payments has been 3.05 percent in the decade. At the end of December 2001 in the Financial Year 2001-02, the debt servicepayment was US $ 7674 million. Table 5.1 provides category wise breakdown of debt servicepayments (details in Annexure-5).
1 The debt service calculated on cash payment basis except for Non Resident Indian Deposits for which accrual method is used. The estimates may,therefore, differs from BOP data compilation methodology.
Table 5.1 : India's External Debt Service Payments(US Dollar millions )
1990-91 1995-96 1997-98 1998-99 1999-00 2000-01 2001-02*
1.External Assistance@ 2315 3691 3229 3270 3057 3444 2273
Repayments 1187 2192 1966 2051 1941 2338 1514
Interest 1128 1499 1263 1219 1116 1106 759
2.External Commercial Borrowing# 3414 5248 4934 5070 5800 7057 4268
Repayments 2004 3868 3550 3477 4147 5362 3110
Interest 1410 1380 1384 1593 1653 1695 1158
3. I. M. F. 778 1860 667 419 267 0 0
Repayments 644 1715 618 393 260 0 0
Interest 134 145 49 26 7 0 0
4.NRI Deposits 1282 1247 1807 1719 1013 1021 744
Interest 1282 1247 1807 1719 1013 1021 744
5. Rupee Debt Service Payments 1193 952 767 802 711 617 389
Total Debt Service (1 to 5) 8982 12,998 11,404 11,280 10,848 12,139 7674
Repayments 5028 8727 6901 6723 7059 8317 5013
Interest 3954 4271 4503 4557 3789 3822 2661
Current Receipts** 25478 49,625 58,545 59,760 67,472 79,003 58,889
Debt Service Ratio (%) 35.3 26.2 19.5 18.9 16.1 15.4 13.0
Interest payments to current receipts
ratio
15.5 8.6 7.7 7.6 5.6 4.8 4.5
* : Debt Service for the period 2001-02 refers to April-December 2001
@ : Inclusive of non-Government account figures supplied by the office of Controller of Aid Accounts & Audit, Ministry of Finance.
# : Excludes accrued interest on India Development Bonds (IDBs). For 1996-97, only that component of principal repayment on IDBs is taken
as debt service, which is redeemed in foreign exchange.
** : Current receipts excludes official transfers.
24
5.1.3 Prudent borrowing decision is mainly based on repayment capacity of the coun-try towards its debt obligations, among other reasons, which is measured by debt service ratio.India’s debt service to current receipts ratio has continuously improved from 35.3 percent in1991 to 15.4 per cent in 2000-01. It further declined to 13 per cent at the end of December2001 (Figure 5.2).
5.1.4 The Table 5.2 provides debt service payments by creditor categories. The share ofcommercial debt in total debt service was 39.8 per cent in 2000-01 as against 38.0 per cent in 1990-91 whereas its share in total outstanding long-term debt was 20.1 per cent at the end of March 2001as against 33.4 per cent at end-March 1991. Multilateral and Bilateral (excluding IMF and RupeeDebt) creditors together accounted for 33.0 per cent of total debt service in 2000-01. Their share in
Figure 5.1 : India's External Debt Service Payments
89828250
76588545
10873
12998 12657
11404 1128010607
12139
7674
5028 47054181
4810
6689
87278229
6901 6723 6825
8317
5013
2661
3822378245574503442842714184
347735453954 3735
0
2000
4000
6000
8000
10000
12000
14000
1990-01 1991-02 1992-03 1993-04 1994-05 1995-06 1996-07 1997-08 1998-09 1999-00 2000-01 2001-02
Note: Year 2001-02 refers from April to December2001
(US
$ m
illio
n)
Total Debt Service Repayments Interest
Figure 5.2 : Debt Service to Current Receipts Ratio
35.3
30.2
27.525.4 25.9 26.2
23.0
19.5 18.9
16.1 15.4
13.0
0
5
10
15
20
25
30
35
40
1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02
Note: Year 2001-02 refers to April to Decembre 2001.
(Per
cen
t)
25
total long-term debt outstanding at end-March 2001 was 48.9 per cent as against 46.6 per cent atend-March 1991.
5.1.4 Debt service on short term debt i.e. principal repayment on trade credit increasedfrom US $ 0.7 billion in 1990-91 to US$ 7.1 billion in 97-98 before declining to US$ 5.6 billion in98-99 (Table 5.3). Subsequently, principal repayment on short-term trade credit increased to US$10.7 billion in 2000-01. As on end December 2001, it stood at US $ 5.3 billion.
5.1.6 Table 5.4 provides international comparison of debt service and debt service ratiofor top 15 debtor countries from the Global Development Finance 2002 of the World Bank. During2000, India had the 5th lowest debt service ratio of 12.8 per cent after Malaysia, China, Russia andKorea Republic (Figure 5.3).
Table 5.2: Debt Service by Creditor Categories
(US $ million)April 01-March 31 April 01-December 31
1998-99 1999-00 2000-01 1999 2000 2001
Multilateral : 2175 2043 2411 1692 2068 1556
Repayment 1303 1261 1629 1017 1422 1005
Interest 872 782 782 675 646 551
Bilateral : 1716 1638 1593 1400 1245 1132
Repayment 1204 1130 1108 991 891 846
Interest 512 508 485 409 354 286
IMF : 419 267 0 240 0 0
Repayment 393 260 0 234 0 0
Interest 26 7 0 6 0 0
Export Credit : 1256 1108 1670 1334 1212 980
Repayment 868 758 1302 956 915 760
Interest 388 350 368 378 297 220
Commercial Borrowing : 3193 4068 4827 3626 3482 2873
Repayment 2153 2939 3661 2534 2647 2013
Interest 1040 1129 1166 1092 835 860
NRI Deposits : 1719 1013 1021 771 758 744
Interest 1719 1013 1021 771 758 744
Rupee Debt (Repayment) : 802 711 617 570 461 389
Total Debt Service : 11,280 10848 12139 9633 9226 7674
Repayment 6723 7059 8317 6302 6336 5013
Interest 4557 3789 3822 3331 2890 2661
Table 5.3: Debt Service on Short-term Trade Credit(US $ million)
Financial Year (April 1 – March 31) Apr. 1-Dec.31
1990-91 1991-92 1996-97 1997-98 1998-99 1999-00 2000-01R 2000-01QE
PrincipalRepayment
677 2413 6247 7130 5562 6402 10698 5305
R : Revised QE : Quick Estimates.
26
Table 5.4 : International Comparison- External Debt Service Payments for top fifteenDebtor Countries, 2000
(Per cent of Export of Goods and Services) (US $ billion)Countries Principal Interest Total Debt Debt Service Service RatioMalaysia 3.7 2.3 6.0 5.3China 14.1 7.6 21.7 7.4Russian Federation 6.1 5.6 11.7 10.1Korea Republic 17.4 5.8 23.2 10.9India 6.0 3.4 9.4 12.8Phillipines 4.0 2.7 6.7 13.6Venezuela 3.3 2.6 5.9 15.3Thailand 9.2 4.9 14.1 16.3Poland 7.7 2.6 10.3 20.9Indonesia 11.3 7.5 18.8 25.3Chile 3.9 2.2 6.1 26.0Mexico 44.5 13.7 58.3 30.2Turkey 14.3 6.9 21.2 36.1Argentina 15.7 11.6 27.3 71.3Brazil 47.7 15.1 62.8 90.7SAARC Countries Pakistan 1.9 1 2.9 26.8Bangladesh 0.6 0.2 0.8 9.1Sri Lanka 0.5 0.2 0.7 9.6Nepal 0.1 0 0.1 6.5Bhutan 0 0 0 4.2Maldives 0.1 0 0.1 4.3Note : Sl No. 1 to 15is the rank of the top 15 debtor countries ordered by total debt service as percent of exports of goods and
services in 2000 (ascending order).
Source: Global Development Finance, 2002, The World Bank.
Figure 5.3 :International Comparison of Debt Service to Exports of Goods and Services Ratio, 2000
5.3 7.4 10.1 10.9 12.8 13.6 15.3 16.320.9
25.3 26.030.2
36.1
71.3
90.7
0
10
20
30
40
50
60
70
80
90
100
Mala
ysia
China
Russia
n Fed
erat
ion
Korea
Rep
ublic
India
Phillip
ines
Venez
uela
Thaila
nd
Poland
Indo
nesia
Chile
Mex
ico
Turke
y
Argen
tina
Brazil
Note :Top fifteen debtor countries by ratio of debt services to export of goods and services (ascending order)
Source :Global Development Finance, 2002, The World Bank
(Per
cen
t)
27
5.2 Debt Service Projections
5.2.1 Based on the end-December 2001 debt stock, the projected debt service payments oflong-term external debt for the next ten years, beginning 2002-03 are provided in Table 5.5. Suchprojections are necessary for debt management exercises, particularly for avoiding bunching ofrepayments and for maintaining the adequacy of foreign exchange reserves to meet contractualobligations.
5.2.2 The projections do not include future debt service obligations out of committedundisbursed balance (disbursement in pipeline) and fresh borrowings. Total annual debt servicepayments are projected to be US $ 8.1 billion in 2002-03 and US $ 12.5 billion in 2003-04 (Table5.5). The hump in debt service payments in 2003-04 (US $ 12.5 billion) and in 2005-06 (US $ 12.4billion) occurs due to the redemption of Resurgent India Bonds and Indian Millennium Depositsrespectively. However, keeping in view the fact that a significant part of these bonds could betransferred in favour of residents or could be reinvested in the form of NRI Deposits, and in thelight of past experience in similar bond issuance like India Development Bonds, the actual debtservice may turn out to be much lower. The projected debt service payments decline steadily since2006-07.
Table 5. 5 : Projected Debt Service Payments* (US $ million)
Year Principal Interest Total2002-03 6073 2017 80902003-04 9743 2796 125392004-05 5889 1420 73092005-06 9804 2552 123552006-07 4256 891 51482007-08 3794 776 45692008-09 2789 612 34012009-10 2465 522 29872010-11 2123 451 25742011-12 1969 394 2363
*: The projections on debt servicing are based on the end-December 2001 debt outstanding position. Projections exclude NRI Deposits andFII investment in Government Debt Securities, which accounted for 13.5 per cent of the total debt service during 2000-01. The projectionsdo not include debt service arising out of committed undisbursed balance (CUB) and fresh borrowings.
Figure 5.4 : Redemption Profile of External Debt Outstanding as on December 31, 2001.
8090
12539
7309
12355
51484569
34012987
2574 2363
0
2000
4000
6000
8000
10000
12000
14000
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Note: The repayment profile does not include principal amount arising out of NRI deposits and FII investment in Government securities.
(US
$ m
illio
n)
28
6. External Debt Management
6.1 External Debt Management Policy:
6.1.1 India resorted to a prudent external debt management policy, after experiencing anear balance of payments crisis in 1991 and subsequent economic reforms in 1990s, to bring theexternal debt situation at a more comfortable level. The policy focuses on external borrowingfrom only multilateral and bilateral sources concentrating on concessional and less expensivedebt, keeping the maturity structure of the total external debt under manageable limits, limitingshort-term debt, prepayment of more expensive debt, encouraging non-debt creating flows oncapital account and exports and invisibles on current account. The principal elements of thestrategy for debt management are:
• The continuation of annual cap, minimum maturity restriction and prioritizing the useof external commercial borrowings;
• LIBOR based ceilings on interest rate and minimum maturity requirements on foreigncurrency dominated non resident Indian deposits to discourage “hot money” componentof such deposits;
• Reduction in short term debt together with controls to prevent its undue increase infuture;
• Retiring/restructuring/refinancing of more expensive external debt;
• Measures to encourage non debt creating financial flows such as foreign direct investmentand portfolio investment;
• Incentive and schemes to promote export and other current receipts;
• Conscious build up of foreign exchange reserve which provide effective insurance againstexternal sector uncertainties;
• Step by step approach towards capital account convertibility which is based on policieson
a) Liberalization of non debt creating financial flows followed by liberalization of longterm debt flows, and
b) Partial liberalization of external commercial borrowings;
• No Government borrowings from External Commercial Sources;
• No short term external debt on Government Account;
• Maturity of Government debt concentrated towards long end for the debt portfolio.
Four debt management areas that need highlighting are as under:
6.2 Annual Cap on External Commercial Borrowings:
6.2.1 External Commercial Borrowings (ECBs) are defined to include loans fromcommercial banks and other financial institutions, export credit and money raised through issuanceof securitized instruments like bonds. It also includes borrowings from International FinancialCorporation (Washington) and private sector borrowing from Asian Development Bank. Everyyear a cap is fixed on ECB sanctions after taking into consideration the requirement of differentsectors and the medium term balance of payment projections. External Commercial Borrowingsare approved within an over all annual ceiling consistent with prudent debt management, the balanceof payment position and level of foreign exchange reserves.
29
Table 6.1 provides data on aggregate approvals, disbursement, debt outstanding and debtservice on ECB borrowings.
Table 6.1: External Commercial BorrowingsYear Approvals Gross
DisbursementAmortisation Interest Total Debt
ServiceDebt
Outstanding1985-86 1390 1470 462 499 961 62271990-91 1903 1700 1191 1042 2233 139091991-92 2127 2798 1146 994 2140 155571992-93 2200 1001 1357 917 2274 158181993-94 2585 1859 1703 896 2599 166501994-95 4469 2670 2513 1091 3603 180371995-96 6286 4538 3311 1162 4473 190241996-97 8581 7018 4032 1177 5209 202611997-98 8712 7400 3411 1406 4817 239461998-99* 5200 6927 3153 1575 4728 281821999-00 3398 2289 3460 1635 5095 275302000-01R** 2837 9295 5043 1683 6726 308242001-02QE# 1442 2151 3008 1158 4166 29871* : Disbursement during 1998-99 includes US$ 4074 million drawals on account of RIBs.** : Disbursement during 2000-01 includes US$ 5520 on account of IMDs.# : From April 2001 to December 2001. R : Revised QE : Quick EstimateNote: During 1998-99 and 2000-01, disbursement sharply exceeded ECB approvals due to issuance of RIBs and IMDs.
Box 6.1 : External Commercial Borrowings Policy
The thrust of the Government policy on External Commercial Borrowings continues to bedirected towards ECBs as an additional source of finance for the Indian Corporate Sector andPSUs for financing expansion of existing capacity and for fresh investment to augment resourcesavailable domestically. The important aspect of ECB policy is to provide flexibility in theborrowings by Indian Corporates and at the same time maintain prudent limits for total externalborrowings. The guiding principles for ECB policy are to keep the maturities long, costs low andencourage infrastructure and export sector financing which are central for overall growth of theeconomy. All end-use restrictions of ECB funds have been relaxed except for prohibiting the useof ECB proceeds for investment in stock market so as to avoid any speculative activities fromsuch proceeds. ECB funds can be utilized for acquisition of shares in the disinvestment process ofpublic sector units.
ECB guidelines and procedures have substantially been liberalised over time with a view to providecorporates greater access to international capital markets. Accordingly, Government have allowedautomatic approval of ECB upto US $ 50 million, including refinancing of existing ECBs. TheGovernment has also delegated sanctioning power of ECB upto US $ 100 million to RBI.Thepolicy also aims at maintaining minimum average maturity while keeping an annual ceiling onapprovals. ECBs with an average maturity of 8 years and above are outside the purview of ECBceiling. The corporates, however, are required to obtain prior approval of MOF/RBI for raisingfunds through this route. The amount raised under this window will be reviewed periodically byGovernment of India.
Average maturities for ECBs would be as under:
(a) US $ 5 million scheme: 3 years simple maturity
(b) US $ 20 million scheme: 3 years average maturity.
(c) For 100 per cent Export Oriented Units: 3 years average maturity for any amount.
(d) Above US $ 20 million: 5 years average maturity for all other sectors.
30
Structured Obligations:
In order to enable the corporate to hedge exchange rate risks and raise resourcesdomestically, domestic rupee denominated structured obligations are permitted to be credit enhancedby the International Banks/International financial institutions/joint venture partners. Theseobligations form a part of the ECBs in the case of defaults when the guarantor has to pay inforeign currency. The amount raised under the structured obligations was US $ 0.23 billion in1999-00 which increased to US $ 1.10 billion in 2000-01 but slid down to US $ 0.020 billion in2001-02.
The foreign exchange earning corporates are permitted to raise up to three times the averageamount of annual exports during the previous three years subject to a maximum of US $ 200million.
As a part of ECB policy, a corporate can also undertake liability management for hedgingthe interest and/or exchange rate risk on their underlying foreign currency exposures, in conformitywith the guidelines of RBI. These products include interest rate swaps, currency swaps, couponsswaps, interest rate caps/collars and forward rate agreements.
Pre-payment facilities on ECBs have been significantly relaxed. As of now, 100 per centpre-payment is permitted where the source is from Exchange Earners’ Foreign Currency Accountin addition to pre-payment out of foreign equity inflow or when the residual maturity of such debtis upto one year. Pre-payment upto 10 per cent of outstanding ECB is also allowed once duringthe life of the loan, except for those companies having already availed prepayment of 20 per cent.
6.3. Short-term Debt:
6.3.1 Given the volatility of short-term debt flows and the possibility of their non-renewalin times of crisis, such flows are strictly monitored and are permitted only for trade related purposes,besides allowing short-term Rupee denominated non-resident deposits. Therefore, the policyregarding short-term debt highlights the fact that appropriate maturity structure, rather than being amicro decision, has a macro aspect and a stability issue. One of the reasons why India couldsuccessfully withstand the adverse effects of East Asian economic crisis and its contagion effectwas that the India had a low proportion of short-term debt.
Box 6.2 : Short-term Debt Management
The Indian policy on short term external debt has largely been dictated by the lessons fromthe payments crisis faced by India in 1991 and continues to be controlled. One of the crucialfactors that led to the payments crisis in 1991 was the relatively high level of short term debt, at $8.5 billion at end-March 1991, and the rollover difficulties associated with the short-term liability.Another related problem with the short-term debt was that it was not used purely for trade financingpurposes, but also used as a means of protecting the foreign exchange reserves.
Accordingly, the policy regarding short-term debt highlights the fact that appropriatematurity structure, rather than being a micro decision, has a macro aspect and a stability issue.Management of short-term external debt now focuses on:
• Presenting India’s short term external debt a residual maturity concept comprising
31
medium and long term debt by original maturity falling due within the 12 monthsperiod following the reference year
• Restricting the quantum of the short term debt to manageable limits,
• Strictly monitoring such liabilities,
• Allowing short term debt transactions only for import purposes,
• A minimum maturity of one year for foreign currency denominated non resident deposits
Discouraging roll-over of short term liabilities beyond six months
6.4 Non-Resident Deposits:
6.4.1 Indian banks are permitted to accept foreign currency and local currency denominateddeposits from non-resident Indians. Such deposits form a part of country’s external debt and havean impact on foreign exchange markets. In the light of Union Budget announcement for 2002-2003, the Non Resident Deposits Scheme have been made fully convertible by Reserve Bank ofIndia. The policies regarding non-resident deposits aim at providing stability to such flows througha variety of measures. Amongst these policies are:
• A policy induced shift in favour of local currency denominated deposits,
• Rationalization of interest rates on rupee denominated deposits
• Linking of interest rates to LIBOR for foreign currency denominated deposit,
• De-emphasising short term deposits (of up to 12 months) in case of foreign currencydenominated deposits,
• An active use of reserve requirements in relation to the cycle of capital flows employedas a part of monetary management,
• To eliminate the foreign exchange risk to the official agencies, exchange guaranteesprovided by RBI on such deposits were also discontinued.
Box 6.3 Non-Resident Deposits
Under the existing practice, non resident deposits of the Indian Banks are included as a
part of external debt statistics, for which principal amounts are freely repatriable to non-resident
depositors. Such deposits, presently include foreign-currency denominated, Foreign Currency
Non-Resident Bank Deposits [FCNR(B)] and rupee-denominated. Non-Resident External Rupee
Accounts [NR(E)RA], for which principal of both are freely repatriable. Previously, schemes of
NRI deposits, like Foreign Currency Non-Resident (Accounts) [FCNR(A)] and Foreign Currency
(Banks and Others) Deposits [FC(B&O)D], which were also treated as external debt liability,
were discontinued in a phased manner during 1993 and 1994. With a view to providing full
convertibility on non-resident deposit schemes, non-repatriable (NRNR) account & non-resident
special rupee (NRSR) account were discontinued w.e.f. April 1, 2002. The key features of such
deposits are summarized in Table 10.
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Box 6.4 : Key Features of Non-Resident Deposits
D ep ositS che m e
C u rren cyD en o m in a tion
R ep atr ia b ility T y p e of A ccou n t/P er iod fo r F ix edD ep osits
R ate of In terest E lig ib le In vesto rs
E X T E R N A L D E B T C O M P O N E N T S
F C N R (B ) U S D o lla r, P ou ndS te rl in g , E u ro an dJapanese Y en
B o th p rin c ip a lan d In te rest free lyrep atriab le
T e rm D ep o sits o f1 -3 yea rs
B an ks are free tod eterm in e in te restra tes w ith in th ep rescr ibed ce il in go f L IB O R /sw apra tio s fo r th eco rresp ond in gm atu rit ies m in u s2 5 b asis p o in ts.
N R I an d O C B s
N R I(E )R A Ind ian R up ees B o th P rin c ip a lan d In te rest free lyrep atriab le
C u rren t S av in gs& T erm D ep o s itsfo r p erio d s asan n ou n ced b y thed ep o sit tak in gb an k .
B an ks are free tod eterm in e in te restra tes
N R Is an d O C B s
F C N R (A )(S che m ed isco n tinu ed )
U S D o lla r, P ou ndS te rl in g , D eu tsch eM ark an dJapanese Y en
B o th P rin c ip a lan d In te rest free lyrep atriab le
T e rm D ep o sits o f6 m on th s 3 years
R egu la te by R B Io vertim e
N R Is
F C (B & O )(S ch em ed isco n tinu ed )
F o re ign cu rren cy B o th P rin c ip a lan d In te rest free lyrep atriab le
T e rm D ep o sits o f6 m on th s 3 years
R egu la ted by R B Io ver t im e
N R Is, O C B s, n on -resid en t b an ks &p en sion fu n d s
N O N E X T E R N A L D E B T C O M P O N E N T S
N R (N R )D (S ch em eD isco n tinued )
Ind ian R up ee O n ly In te restfree ly rep atriab le
T e rm D ep o sits o f6 m on th s 3 years
B an ks are free tod eterm in e in te restra tes.
A n y p erso n resid en to u ts id e Ind ia
N R O Ind ian R up ee O n ly In te restfree ly rep atriab le
C u rren t, S av in gs ,R ecu rr in g & T ermD ep o sits fo rp er io d s asan n ou n ced b y thed ep o sit tak in gb an k .
B an ks are free tod eterm in e in te restra tes.
A n y p erso n resid en to u ts id e Ind ia .
N R (S )R A Ind ian R up ees N o n R ep atriab le1 C u rren t, S av in gs ,R ecu rr in g & T ermD ep o sits fo rp er io d s asan n ou n ced b y thed ep o sit tak in gb an k .
B an ks are free tod eterm in e in te restra tes
N R Is
F C (O N ) (S ch em ed isco n tinu ed )
F o re ign C u rren cy O n ly In te rest freerep atrib le
T e rm D ep o sits o f6 m on th s 3 years
R egu la ted by R B Io ver t im e.
N R Is
FC N R (B ): F o reign Cu r rency N on -R esid en t B a nk D epo sits in tro du ced in M ay 1 993 a s a su b stitu te o f F C N R (A ) d ep o sit and w ith ou t an y p ro v is io no f exchan g e g ua ra n tee b y R B I to bo r ro w er b an ks. (1 ) A s pa r t o f p ru den tia l de b t m a nag e m en t sho rt te rm depo s its o f m a tu rity le ss thano ne yea r w ere w ith d raw n effec tive O c tob er 1 99 9 .
N R (E )R A : N o n -R esid en t E x te rn a l R up ee A c co un t in trod uc ed in F eb ru a ry , 19 7 0 .
FC N R (A ): F o re ig n C u r ren cy N o n -R esid en t A cco un ts w ith ex ch ang e g ua ran tee fa c i l ity p ro v id ed b y R B I to bo rro w e r b an ks w a s in tro du ced inN o vem b er , 197 5 . Th e sch em e w a s d isco n tinu ed in a ph a sed m ann er du r ing M ay 1 5 , 1 9 93 a nd A ug us t 15 , 19 94 . T he e ffec tive da te s ofw ith d ra w a l fo r d if fe ren t m a tu rities a re a s fo l lo w s: less tha n on e yea r (M ay 15 , 1 993 ), on e yea r to tw o yea rs (O c to ber 12 , 1 9 93 ), tw o toless th an th re e y ea rs (F eb rua ry 15 , 19 9 4 ) an d o f th ree y ea rs (A ugu s t 15 , 19 9 4 ).
FC (B & O )D : F o re ig n C u rren cy (B an k s & O th ers )D ep o sits , in trod uced in N o vem b er 1 99 0 w ith exc han ge g ua ra n tee fac i lity p rov id ed by R B I tob o r row er ba nk s w a s d isco n tinu ed fro m Ju ly , 19 9 3 .
N R (N R )D : N o n -R esid en t N o n -R epa tr ia b le R u pee D epo s it: in trodu ce d in Jun e 199 2 (2 ): T he sche m e w a s d isc on tinued w ith e ffect fro m A p r i l 1 ,2 002 .
N R O : N o n -R esid en t O rd ina ry A ccoun t ge ts au to m a tic a l ly o pen ed w hen a res iden t beco m es a non -residen t.
N R (S)R A : N o n -R esid en t Sp ec ia l R u pee A ccou n t: In tro d u ced in A p ri l , 199 9 (3 ). T h e S che m e w a s d isco n tinu ed w ith e ffec t fro m A p r il 1 , 20 02 .
FC (O N ): F o re ig n C u r ren cy (O rd in a ry N on -rep a tr iab le ) D ep o sits, in trod u ced in Jun e 19 9 1 w ith excha ng e gua ran te e fa c i li ty p rov id ed b y R B I tob o r row er ba nk s w a s d isco n tinu ed fro m A ugust, 1994.
33
Box 6.5 : Full Convertibility of Non-Resident Deposit
The core definition of External Debt given by the International working group of External debtstatistics 1988 (IWGEDS) states that “ Gross external debt is the amount, at any given time, of disbursedand outstanding contractual liabilities of residents of a country to non- residents to repay principal, withor without interest, or to pay interest with or without principal. “As none of the multilateral agencies viz.the World Bank, the IMF, BIS and OECD follow this definition, the coverage and magnitude of ExternalDebt differ as presented by these organizations.
Under the existing practice, the deposits under Non-Resident (Non –Repatriable) Rupee Accounts(NRNR(RD)) were not being treated as a part of external debt of India since the principal amounts underthis scheme were not repatriable meaning thereby that the principal amounts were repaid in rupees withinIndia.
The Union Budget, 2002-03 proposed measures for further liberalization of the capital accountwhich were followed by the Reserve Bank of India announcing the implementation of these measures.The Union Budget measures read as:
· There will be full convertibility of deposit schemes for Non-Resident Indians. The existingForeign Currency Non-Resident (FCNR(B)) scheme and the Non-Resident External Rupee(NRE) scheme will continue to be repatriable.
· The two non-repatriable schemes viz. Non-Resident (Non-Repatriable) Rupee Account andNon-Resident (Special) Rupee Account will be discontinued w.e.f. April 1, 2002. The existingbalance in the Non-Resident (Non-Repatriable) Rupee Accounts will be allowed to be creditedon maturity to the convertible NRE account.
· The current earnings of the NRIs such as rent, dividend, pension, interest etc. could be freelyrepatriated in foreign currency.
As a follow-up of these announcements, the Reserve Bank of India in the Monetary and CreditPolicy for the year 2002-03 incorporated the following decisions:
· With a view to provide full convertibility on Non- Resident Deposit schemes, the NRNRAccount and NRSR Account schemes stand discontinued w.e.f. April 1,2002. The bankswould not accept any deposit, whether by way of renewal of existing deposits or otherwiseunder these two schemes effective April 1,2002.The existing accounts under NRNR scheme,however, would continue upto the date of maturity. On maturity, these proceeds shall becredited to the account holder’s non-resident (external) account (NRE account), after givingnotice to the account holder. Similarly, the existing accounts in the form of term depositsunder NRSR scheme may be continued till the maturity date and the proceeds shall be creditedto the account holder’s Non-Resident Ordinary (NRO) account. Further, the NRSR accounts,other than the term deposits, would not be continued after September 30,2002 and could beclosed or balance credited to the NRO accounts on or before date at the option of the accountholder.
· NRIs will be able to repatriate their current income in India such as rent, dividend, pension,interest etc. by submitting a certificate from their chartered accountant certifying that theamount proposed to be remitted is eligible for remittance and that applicable taxes have beenpaid/provided for.
As a consequence of implementation of these decisions, the External Debt of India would increaseto the extent the maturity proceeds of NR(NR)RD deposits are credited to the NRE account from time totime.
6.5. Prepayment of High Cost Debt:
6.5.1 Existence of saving-Investment gap in the national accounts necessitates raisingresources through External Assistance. Retiring & refinancing of more expensive external debthas been one of the principal elements of a conscious and prudent debt management policy adopted
34
by Government of India over the years. This has actually resulted in consolidation and improvementin India’s external debt position. Such strategy transmits positive signals regarding external asset-liability management capabilities of the sovereign and helps improve international credit ratings.Another explicit advantage accruing from the pre-payments is that while debt-servicing paymentsare low, bunching of repayments is avoided at the time of higher debt-service obligations. Theproductive use of the available stock of foreign exchange reserves offers an added advantage arisingfrom the pre-payment of expensive external debt.
6.5.2 The pre-payment proposals as identified by Government of India in respect of SovereignDebt or those received from the Public Sector Units/Corporate are examined in accordance with themerit of terms and conditions of loan agreements, resulting in savings from prepayment procedure,its impact on forex reserves savings and budget neutrality.
Table 6.2: Prepayment of High Cost External Debt ( 2001-02 and 2002-03)
Borrower Lender Amount of PrepaymentUSD Million Rs crores
Container Corporation of India IBRD 2.85 13.43
Housing Development Finance Corporation ADB 19.66 94.36
Mumbai Port Trust ADB 43.42 209.77Bombay Sub Urban Electric Supply Ltd. IBRD 26.65 129.88
Housing Urban Development Corporation Ltd Japan 9.50 46.30Oil & Natural Gas Corporation IBRD 303.09 1562.35Oil & Natural Gas Corporation ADB 206.77 1007.18Tata Power Co. IBRD 22.31 109.31
Tata Power Co. IBRD 68.57 336.00
TOTAL 702.82 3508.58
6.5.3 The ad-hoc Group on Prepayment of High Cost External Debt has gone through theissues of conceptualization/identification of high cost external debt and eventually examined thefinancing options of the prepayment (Box 6.5). Accordingly, during the year 2001-02 and 2002-03costly external loans amounting US $ 702.82 million have been prepaid (Table 6.2).
Box 6.6 Ad-hoc Group on Pre-payment of High Cost External Debt
Against the backdrop of a soft interest rate regime both in the international and domesticmarkets and a build up of comfortable level of foreign exchange reserves, the debate that assumessignificance is whether the external loans are beneficial to be retained by Government of India oris it advantageous to pre-pay some of the more expensive loans exercising different financingoptions. Government of India has constituted an Ad-hoc Group on pre-payment of high costexternal debt. This Group consists of senior officials from the Ministry of Finance and ReserveBank of India. The Group deliberated on the issues of conceptualization/identification of highcost debt with/without currency risk and recommended pre-payment options of a part of theSovereign External Debt including guaranteed debt and pre-payment of selected corporate debt.The Group also examined the desirable financing options for these pre-payments.
The Group recommended to pre-pay approximately US$ 500 million of identified highcost external debt during the Financial Year 2001-02. The details of pre-payments effected by thePSUs/corporate after the approvals are provided in Table 6.2. However, no cases of sovereign
35
debt pre-payments were approved during the financial year 2001-02. Major issues discussed bythe Group are as follows:
Conceptualisation of high cost debt
(1) The guiding principle would be to compare the interest rate on the external debt to thedomestic market rate for the similar maturity,
(2) The following benchmarks could be applied for identification of expensive externaldebt:
(a) Loans where interest rate adjusted for prepayment cost is clearly higher than thedomestic interest rate.
(b) For fixed rate loans a spread of 300-350 basis points could be taken as the hypotheticalSovereign Borrowing rate and for floating, it can be taken as 100-150 basis pointsover LIBOR. These are the rate at which Countries with similar investment ratingare accessing the international bond market.
(c) For short maturity term loans (maturing within 5 years), the interest rate on the loanbeing prepaid adjusted for prepayment cost plus the recent depreciation of the rupeeagainst the currency of denomination of the loan compared with the domestic interestrate prevailing for similar maturity.
(d) For Sovereign debt raised from multilateral/bilateral sources, the benchmark wouldinclude interest rates for similar maturities in the domestic market as also theprevailing fixed/floating interest rate in the international market.
Identification of high cost debt:
(1) DM loans were identified as high cost loans. Resetting of interest rate on these loans hasbeen completed.
(2) Considering the prevailing low interest rates, refinancing of Yen loans may be considered.The modalities of refinancing of these loans are under the consideration of GOI.
(3) Government guaranteed PSU debt may be considered for prepayment provided cost/benefitanalysis has been done by the PSUs.
(4) Corporate debt not guaranteed by the Government may also be considered for prepayment.
The financing options:
(A) Purchasing foreign exchange from market agents, canalising the receipts of debtors toRBI for purchase of foreign exchange from the market and investing the same as reserveswith matching maturity to pay the installments on due dates. This requires raising ofequivalent amount of Rupee resources.
(B) Refinancing of loans by availing of other loans of matching maturity at cheaper marketrates from international commercial entities, an option which has not been exercised inthe past.
(C) Resetting of interest rates of high cost loans with the prevailing lower rates of interest.
(D) Draw down from foreign reserves of RBI which would necessitate raising of equivalentamount of Rupee resources.
36
(E) Refinancing the external loan with a domestic loan of similar maturity involving therebyraising of equivalent rupee resources.
(F) Acceleration of disinvestment process for utilising a portion of the receipts for the purposeof prepayment.
(G) Floatation of a Sovereign Bond after careful consideration of the domestic and internationaleconomic conditions.
The financing options, which have an adverse impact on the outgo of foreign exchangereserves, balance of payment position, rupee depreciation or lead to widening of fiscal deficit ofthe government need to be avoided. The ideal prepayment options should be cheaper, foreignexchange and budget neutral. Besides weighing the relative costs of the various financing options,the benefits accruing from raising external loans vis-à-vis domestic loans deserve dueconsideration. Such benefits include longer moratorium on the external loans, comfortably longmaturity profiles, comprehensive project appraisals, superior technology transmissions, thoroughsurveillance/monitoring in line with the international best practices and strict adherence to termsand conditions.
Prepayment of External Commercial Borrowings:
Reserve Bank of India has been delegated powers to grant all approvals for pre-paymentsas per the prevailing guidelines, even in the cases where ECBs had been approved earlier by theMinistry of Finance.
Provisions of pre-payments under ECB guidelines read that (a) pre-payment facility wouldbe permitted if these are met out of inflow of foreign equity (b) in addition to ECB being pre-paidout of foreign equity, corporate can avail either of the following two options for pre-payment oftheir ECBs:
(1) On permission by the government, pre-payment may be undertaken within thepermitted period of all ECBs with residual maturity upto one year.
(2) Pre-payment upto 10 per cent of outstanding ECB to be permitted once during thelife of the loan, subject to company complying with the ECB approval terms. Thosecompanies who had already availed pre-payment facility of 20% earlier would notbe eligible.
At present, pre-payment of ECBs upto 100 per cent is permissible where the source offunds is from exchange earners’ foreign currency amount or pre-payment is effected from foreignequity inflow or when the residual maturity of such debt is upto one year.
6.6. External Debt Monitoring
6.6.1 Proper coverage, monitoring and timely availability of debt data is a prerequisite forsuccessful debt management. The volume and complexity of loan records have grown so muchover time that manual record keeping normally does not allow data to be easily retrievable foranalysis. Therefore, computerization becomes a prerequisite for use of debt data as MIS input fordebt management decisions.
6.6.2 In an endeavor to make the external debt data conveniently accessible, significantprogress has been achieved towards its computerization. The database management systemCS:DRMS (Commonwealth Secretariat: Debt Recording & Management System) of Commonwealth
37
Secretariat, London is in use for over a decade now to generate statistics on debt profile and alsodebt servicing. This has resulted in online connectivity and data interchange. The experience withusing CS:DRMS has been satisfactory. The system conducts auto generation of data with greatefficiency. Important features of the System include:
i) User friendliness in terms of easy data entry, validation and editing, capability ofproducing standard reports, adhoc queries etc.
ii) The System is amenable to analytical applications with management tools to generateprojections of debt profile, debt servicing and also evaluate structural changes todebt portfolio.
iii) The system is capable of interfacing with the external systems, it facilitates calculationof present value, grant element and adds user defined menus and reports.
6.6.3 External Debt Management Unit (EDMU) serves as an apex Unit for monitoring ofexternal debt with active support from Controller of Aid Accounts & Audit Division in theDepartment of Economic Affairs, Ministry of Finance and Reserve Bank of India (RBI).
6.6.4 Development of MIS system has become possible with the help of InstitutionalDevelopment Fund (IDF) provided by the World Bank with a view to strength external debtmanagement capabilities through effective monitoring. Presently, there is an endeavor to upgradethis with the help of ADB Grant.
6.6.5 Aid Accounts & Audit Division in the Department of Economic Affairs, Ministry ofFinance have implemented a fully computerized system [ Integrated Computerised System (ICS)]covering all the work activities relating to Sovereign External Debt. This system is capable ofproviding debt data at micro economic level as well as at macro level on real time. This has openedup opportunities for prudential debt management in analyzing the same on various parameters andscenario building. Apart from saving the manual effort in updating CS:DRMS, the time lag inreporting has also been considerably reduced. This Division also maintains website(www.finmin.nic.in/caaa) containing information relating to entire debt portfolio which can be queriedon a number of parameters. To facilitate monitoring of the entire disbursement cycle by ProjectImplementing Agencies, Central Government, State Governments, Donors the website contains online status on the following:
i) Status of disbursement claims;
ii) Status of ACA release to states and
iii) Disbursement Outstanding Debt (DOD)
Further action to develop a dynamic website to enable query of the ICS database is on hand.This is expected to further facilitate tracking by all concerned.
6.6.6 At, present nearly seventy five per cent of external debt data have already beencomputerized with twenty five per cent still being handled manually. The computerized debt datainclude data on external assistance consisting of Multilateral and Bilateral borrowings, ExternalCommercial Borrowings and Rupee debt data. Efforts are under way, however to carry on with thecomputerization of statistics on Non Resident Indian Deposits and Short Term debt. The objectivenow is to achieve cent per cent computerization of external debt statistics in the medium term.
6.6.7 Reporting system on external debt statistics is well in place with the compliance ofSDDS requirement to publish statistics on a quarterly basis. Reserve Bank of India reports debt datafor the end periods end-March in RBI Annual Report and end-June in the Monthly Bulletin . ExternalDebt Management Unit comes out with the end-September data in the Economic Survey and end-December data in the Status Report on External Debt. The reporting system has a time lag of sixmonths and efforts are being made to reduce the lag to three months.
38
7. Sovereign External Debt Management
7.1 Organisational Structure
7.1.1 The organizational structure for the management of sovereign external debt can bedescribed in the conventional set up for the debt management comprising the following:
• Head Office, i.e. the office responsible for final approval of public debt;
• Front Office, responsible for appraisal of projects funded by debt and making negotiationswith the lenders;
• Middle Office, responsible for measurement, monitoring, policy formulation and riskmanagement, and
• Back Office, responsible for auditing, accounting, data consolidation, and functions ofthe dealing office.
7.1.2 The Finance Minister acts as the Head Office for both internal and external publicdebt. Several territorial Divisions in the Department of Economic Affairs in the Ministry of Finance,such as the Fund-Bank Division, ECB Division, ADB Division, EEC Division, and Japan Division,in addition to the Reserve Bank of India act as the front offices. The External Debt ManagementUnit located in the Ministry of Finance, acts as the Middle Office, and the Office of the Controllerof Aid Accounts & Audit in the Ministry of Finance acts as the back office.
7.2 Sovereign External Debt Stock
7.2.1 In the back drop of changing environment in international debt market on needs andpattern of loans, the lenders are required to make their own decision regarding choice of currency,interest and maturity mix to withstand against the free standing hedging products (derivative products)like interest and currency swap, interest rate caps, collars etc. already in offer by IBRD and ADB.Since India has no access to international capital market as a sovereign entity, active managementof sovereign external debt portfolio has become imperative to build capacity for managing financialcosts and risks to take sound financing decisions.
7.2.2 For this purpose, a Core Group and a Steering Committee comprising officials fromMinistry of Finance and Reserve Bank of India have been set up. The objective is to developbenchmarks that lead to optimal currency, interest and maturity mix of sovereign external debt so asto minimize costs and risks. The external debt data on Government account (external assistance)being fully computerized, historical data and future projections are readily available for analysis,scenario building and as MIS input for sovereign external debt modeling.
7.2.3 External debt of Government of India, generally known as external debt on Governmentaccount, comprises external assistance from multilateral and bilateral sources. Other componentsof Government debt are accounted for by debt from IMF, defence debt and FII investment inGovernment securities. Controller, Aid Accounts and Audit in Ministry of Finance monitors externaldebt on Government account.
7.2.4 Table 7.1 shows total external debt of Government along with breakup by majorcreditor sources of Government Account External Debt.
39
Table 7.1: External Debt outstanding of Government (US $ million)
End-March End-Dec.
1997 1998 1999 2000 2001R 2001QEI. Multilateral
26369 26344 26967 27555 27417 27611 IDA
17337 17541 18301 18964 18811 19079 IBRD
6772 6430 6062 5797 5657 5559 ADB
1961 2078 2309 2507 2680 2699 IFAD
208 211 221 225 213 219 Others 91 84 74 62 56 55Share of multilateral debt to Govt. account debt
63.4 64.6 64.4 64.4 67.3 68.3II. Bilateral
15223 14461 14929 15243 13304 128411 Japan
6423 6506 7441 8705 7513 74052 Germany
3165 2853 2789 2374 2113 20183 United States
1824 1693 1574 1436 1298 11964 France
1001 925 891 760 679 6455 Netherlands
756 654 629 524 447 4086 Russian Federation
654 556 482 447 407 3997 Others
1400 1274 1123 997 848 770Share of bilateral debt to Govt. account debt 36.6 35.4 35.6 35.6 32.7 31.7
III. Govt. Debt from External Assistance (I+II)*41592 40805 41896 42798 40727 40452
IV. Other Govt. External Debt** 7468 5715 4241 4029 3300 2744V. Total Government External Debt (III+IV) 49060 46520 46137 46827 44027 43196* : External debt on Government Account represents borrowings from external assistance.** : Other Government External Debt comprises of Defence debt, loans from IMF, and FII investment in Government debt securities.QE : Quick Estimates R : Revised
7.2.5 The total external debt on Government Account has declined from US $ 41.6 billion at
end-March 1997 to US $ 40.8 billion at end-March 1998, before increasing to US $ 41.9 billion at
end of March 1999 and further to US $ 42.8 billion at end-March 2000. At end of March 2001
Government debt from external assistance declined to US $ 40.7billion. Sovereign external debt
stock from external assistance stood at US $ 40.5 billion at end-December 2001.Multilateral debt in
the Government External Account, which was US $ 26.4 billion at end-March 1997 increased to
US $ 27.6 billion at end-December 2001, as against bilateral debt which declined from US $ 15.2
billion to US $ 12.8 billion during the same period. So the share of multilateral debt to Government
debt from external assistance increased from 63.4 per cent at end-march 1997 to 68.3 per cent at
end-December 2001, while corresponding decline in bilateral debt was from 36.6 per cent to 31.7
per cent.
7.2.6 Total Government external debt, however, declined from US $ 49.1 billion at end-
March 1997 to US $ 44.0 billion at end-March 2001.This decline is mainly attributed to prepay-
ment of IMF debt and steady liquidation of rupee denominated debt from Russia through exports.
At the end of December 2001 total Government external debt further declined and stood at US $
43.2 billion.
40
Table 7.2 : Government Account External Debt Service*(US $ million)
1996-97 1997-98 1998-99 1999-00 2000-01 2001-02**Multilateral : 1849 1808 1800 2008 2374 1233
Principal 1053 1078 1117 1239 1606 806Interest 796 730 683 770 768 427
Bilateral : 1173 1115 1154 1048 1070 714Principal 784 740 802 702 732 516Interest 389 375 352 346 338 198Total Govt. Account : 3022 2923 2954 3057 3444 1947Principal 1837 1818 1919 1941 2338 1322Interest 1185 1105 1035 1116 1106 625* : Government Account external debt is the main component of total Government external debt and represent borrowings from external
assistance as mentioned in Table 4.3. It does not include other components of Government external debt service payments on account ofborrowing from IMF, Defence debt, and FII investment in Government securities.
** : From April 2001to December 2001 Quick Estimate.
7.4 Debt Service Projections on Government Account
7.4.1 Table 7.3 shows sovereign debt service projections on Government Account for the
next ten years based on debt outstanding as on End-December 2001. The debt service payment is
projected to be around US $ 2.8 billion over the next three years. It begins to decline from 2005-06
steadily and the redemption profile for next ten years accounts for total repayment of US $ 24.9
billion or 61.5 per cent of the debt outstanding at end-December 2001.
Table 7.3: Projected Debt Service Payments on Government Account(US$ Million)
Year Principal Interest Total2002-03 1982 824 28062003-04 2040 757 27972004-05 2063 694 27572005-06 2063 631 26942006-07 2039 569 26082007-08 1968 510 24782008-09 1874 458 23322009-10 1833 407 22402010-11 1763 361 21242011-12 1743 318 2061
* : The projections are based on the end-December 2001 outstanding position of Government Account multilateral and bilateral debt (externalassistance) maintained by the O/o CAA&A and other components of Government external debt like Defence debt. It does not include FIIInvestment in Government securities. The projections also do not include debt service arising out of committed undisbursed balance (CUB)
and fresh borrowings.
7.3.1 Table 7.2 shows debt service on government Account debt. The debt service pay-ments remained stable at around US $ 3 billion during 1996-97 to 2000-2001 and declined to US $1.9 billion at end of December 2001.
41
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
S1
2806 2797 2757 26942608
206121242240
23322478
0
500
1000
1500
2000
2500
3000
(US
$ m
illio
n)Figure 7.1 Redemption Profile of External Debt on Government Account
Box 7.1: Sovereign Credit Rating
Sovereign rating refers to the opinion of international credit rating agencies on credit
risk inherent in sovereign debt obligations. Sovereign’s ability and willingness for the repayment
over the period of the rated instrument is measured by the rating. Investors’ decision for
investment in international bonds and other debt instruments, often, are based on such ratings.
The pricing of international bonds is also governed by such ratings. The rating is implicit in the
case of countries like India, which do not access international capital markets as sovereign
entity.
Sovereign credit rating started in 1959 when Standard & Poor rated the first industrial
country, France. India has been assigned sovereign ratings by Moody’s and Standard & Poor for
over a decade. Moody’s first rated India in 1988 while Standard & Poor assigned its rating to
India in August 1990 with an investment grade rating. The external crisis of 1991 prompted both
these agencies to down grade the sovereign credit rating of India to speculative grade. Both the
agencies brought India back to investment grade in June 1994 followed by speculative outlook
grade in June 1998.
India’s sovereign rating was BBa2 with “stable” outlook by Moody’s and BB with
“negative” outlook by Standard & Poor in May 2002. Table 7.4 provides a snapshot of
sovereign rating assigned by Standard & Poor and Moody’s Investor Service to top fifteen
debtor countries. The rating applies to long-term foreign currency sovereign debt issue by
the respective countries.
42
Table 7.4: International Comparison of Sovereign Credit Ratings
Standard & Poor’s Moody’sSl. No. Country
Rating Grade Rating Grade
1 Brazil BB- Negative B1 Positive
2 Russian Federation B+ Positive Ba3 Positive(3)
3 Mexico BBB- Stable Baa2 Stable
4 China BBB Stable A3 Stable
5 Indonesia SD B3 Positive (3)
6 Argentina SD Ca Stable
7 Korea Republic BBB+ Stable A3 Stable
8 Turkey B- Positive B1 Stable
9 Thailand BBB- Stable Baa3 Stable
10 India BB Negative BBa2 Stable(1)
11 Poland BBB+ Stable Baa1 Stable
12 Philippines BB+ Stable Ba1 Stable
13 Malaysia BBB Positive Baa2 Positive(3)
14 Chile A- Positive Baa1 Stable
15 Venezuela, RB B Negative B2 Negative
Note: Sovereign credit ratings refer to the sovereign ceiling for foreign currency ratings on long-term bonds & notes as on May 9, 2002 forS&P and on May 20, 2002 for Moody’s for top 15 debtor countries.
(1) Domestic Currency Government Bond ratings have a negative outlook.
(2) Domestic Currency Government Bond ratings are on review for possible downgrade
(3) Domestic Currency Government Bond ratings have stable outlook.
Source: Web sites of S&P and Moody’s Rating Services
43
8. Contingent Liability on External Debt
8.1 Credit Guarantees on External Debt
8.1.1 Government of India provides guarantees on a selective basis on external borrowings
by public sector enterprises, developmental financial institutions and in some instances to private
sector companies. While all loans under the external assistance window, i.e. from multilateral and
bilateral creditors involve credit guarantees by the Government, commercial borrowings by some
public sector enterprises, financial institutions also involve credit guarantees provided by the
Government. Such credit guarantees are to be invoked in the case of default by the borrower and
therefore, constitute explicit contingent liability of the Government, which have direct implications
for the budget in the event of default.
8.1.2 Table 8.1 provides data on such direct guarantees provided to creditors by Government
for public sector, financial sector and the non-financial private sector external debt (i.e., on account
of external assistance and external commercial borrowings) since March 1994. There has been a
steady decline in Government guarantees from US $ 10.7 billion at the end of March 1995 to US $
7.5 billion at the end of March 2000. Government Guarantee stood at US$ 6.7 billion at the end-
Dec. 2001.
Table 8.1 : Central Government Credit Guarantees on External DebtMarch 31
1994 1995 1997 1998 1999 2000 2001RDec.31
2001QE(US $ million)
1. Govt. Debt 55943 59502 49060 46520 46137 46852 44027 43196
2. Non-Govt. Debt 36752 39506 44410 47011 51412 52604 55678 55211
3. of which with Govt.Guarantee*:(a+b+c)
10568 10733 8170 7270 7174 7450 6798 6744
a. Financial Sector 1709 1695 2259 2323 2496 2673 1916 1819
b. Public Sector 8533 8671 5545 4605 4363 4503 4634 4691
c. Private Sector 326 367 366 341 315 273 248 234
4. Total External Debt (1+2) 92695 99008 93470 93531 97549 99456 99705 98407
5. Govt. Debt and GuaranteedDebt (1+3)
66511 70235 53790 53311 54302 60521 50825 49940
(ratios as per cent)6. Govt. Debt and Guaranteed
Debt to Total External Debt(5/4)
71.8 70.9 65.8 61.2 57.5 54.7 51.0 50.7
7. Govt. Guaranteed Debt toNon-Govt. Debt (3/2)
28.8 27.2 21.0 18.4 15.5 14.0 12.2 12.2
* : Direct credit guarantees on external debt provided by the Central Government.QE : Quick Estimates R : Revised
44
10568 10733
8170
7270 7071 74506798 6744
0
2000
4000
6000
8000
10000
12000
US
$ M
illio
n
End-March,1994
End-March,1995
End-March,1997
End-March,1998
End-March,1999
End-March,2000
End-March,2001
Dec. 31,2001
Fig.8.1:Government Credit Guarantees on External Debt
8.1.3 The debt service profile of credit guarantees provided by Government on external
debt outstanding as on December 31, 2001 during the next ten years is provided in figure 8.2. The
total projected debt service obligations on credit guaranteed by the Government declined from
US $ 1.2 billion in 2002-03 to US $ 0.4 billion in 2011-12.
Figure 8.2: Credit Guarantee on External Debt by Government -Projected Debt Service Profile
577 624499 479 437 427 412 398 366 322
619 451
422
186 164 143 122 103 86 70
1196
1075
921
666600 571 534 501
451392
0
500
1000
1500
2000
2500
2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12
US
$ M
illio
n
Principal Interest TOTAL
45
Box 8.1 CONTINGENT LIABILITIES
The contingent government liabilities are associated with major hidden fiscal risks. Theconventional fiscal analysis, however fails to address contingent fiscal risks, as fiscal adjustmentstargeting deficit or debt reduction do not necessarily prevent fiscal instability. The transition andemerging economies are particularly vulnerable to large fiscal risks on account of heavy foreignfinancing, opaque ownership structures, limited information disclosures, weak regulatory andenforcement systems etc. which escalate financial & corporate failures making it tough for thegovernments to offer bailouts.
The government obligations outside the budget thus form an important constituent of thecountry’s fiscal position.
The fiscal liabilities viz. Direct (predictable) and Contingent (uncertain and explicit definedby law or contract/ implicit or moral) are summarized below:
POSSIBLE SOURCES OF FISCAL RISK FOR THE CENTRAL GOVERNMENT
Contingent liabilities grow with the weakness in the financial sector, macroeconomicpolicies, regulatory and supervisory systems and information disclosure. The support programshave uncertain public financing requirements. The program designing must ensure less volatilefinancing requirements and lower exposure to risk. Governments that are risk averse, have alimited capacity to manage risk and cannot borrow easily should abstain from contingent supportprograms altogether. The policy imperatives include:
· Understanding the consequences of these risks· A strong accountability framework· Enforcing broader fiscal disclosure e.g. IMF’s Fiscal Transparency Code· Serious analysis of fiscal risks in the order of significance.· Addressing the noncash programs involving contingent fiscal risks as attentively as
any other spending program.—————————————————————————————————————————————-1‘Contingent Liabilities- a Threat to Fiscal Stability’ Extracts from Poverty Reduction and Economic Management Notes, November 1998, The World Bank.
ExplicitLiabilities
ImplicitLiabilities
Direct Liabilities
• Foreign & domesticsovereign debt
• Budget expenditures
• Future public pension if notrequired by law
• Social security schemes if notrequired by law
• Future health care financing ifnot required by law
• Future recurrent cost of publicinvestments
Contingent Liabilities• Guarantees for borrowing and obligations of sub
national governments and public or private entities• Umbrella guarantees for various loans• Trade & exchange rate risk guarantees• Guarantees for private investments• State insurance schemes
• Defaults of sub national govts. And public orprivate entities on nonguaranteed debt and otherobligations
• Liability clean up in entities being privatized• Bank failures• Failures of non guaranteed pension funds/other
social security funds• Default of central bank on its obligations• Collapse due to sudden capital outflows• Environmental recovery, disaster relief, military
financing
46
9. Conclusions
9.1 Status Report on External debt 1993 was the first step towards stimulating publicawareness on External Debt issues. There has been no looking back since then. Rather persistentefforts have continued to introduce fresh initiatives in terms of widening the coverage, aiming atcent per cent computerization of external debt statistics (it being 20 per cent short at present),improving coordination among the reporting agencies, emphasis on periodic pre-payment of highcost external debt etc. These initiatives have yielded explicit results in terms of consistent andsignificant improvements in all the important debt indicators. Major achievements of the past decadeinclude relative stability of external debt, shrinking share of volatile short-term debt and relativedominance of concessional funding. The future strategy, apart from incorporating and extendingthe prudence in management of the external debt also aims at reducing time lags in data disseminationand ensuring greater transparency. The reporting systems are already in place with Ministry ofFinance performing the assigned role of publishing debt data twice in an year in Economic Survey(end-September) and Status Report on External Debt (end-December) and Reserve Bank of Indiaassuming responsibility for other two quarters by bringing out debt data in the Annual Report (end-March) and RBI bulletin (end-June).
9.2 The system of projecting decadal debt servicing has proved strategic to the debtmanagement decisions apart from facilitating the external asset management capabilities of thecountry. The multilateral agencies have gone on record to compliment India on invariably honoringits repayment commitments and also deciding to pre-pay identified expensive debt obligations.
9.3 Against the backdrop of not so bright economic scenario, the investor confidence inthe country’s economy received a major boost, which was reflected in terms of an overwhelmingresponse to Resurgent India Bonds (August 1998) and India Millennium Deposits (October/November 2000). The international investor confidence has further been raised with the WorldBank placing India in the less indebted category.
9.4 The years to come hold a promise of further consolidation of the gains already madewith a tough task of further strengthening of mechanisms and monitoring of the external debt statisticswhile reflecting more on the micro management of the external debt, productive deployment of theavailable resources to reduce indebtedness and exploring the non-conventional options of raisingexternal assistance with an open mind. Simultaneously, use of resources raised from external sourcesas cost of raising external debt has to be taken in to account with the returns from investment madeout of these resources.
47
ANNEX 1
India’s External Debt Outstanding (Annual)
(Rs. crores)
End - March End Dec.
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001R2001QE
I. MULTILATERAL 40,386 68,262 77,758 82,199 89,819 98,173 105,066 116,904 129,682 137,132 145,116 150,418A. Government Borrowing 38,429 63,787 72,286 75,617 82,223 89,428 94,824 104,218 114,531 120,321 127,901 132,973
(i) Concessional 25,849 40,990 48,206 50,250 55,963 60,425 63,418 70,560 78,979 84,051 89,009 93,204a) IDA 25,221 40,017 47,167 49,238 54,897 59,349 62,343 69,392 77,725 82,721 87,753 91,884b) Others 628 973 1,039 1,012 1,066 1,076 1,075 1,168 1,254 1,330 1,256 1,320
ii) Non-concessional 12,580 22,797 24,080 25,367 26,260 29,003 31,406 33,658 35,552 36,270 38,892 39,769a) IBRD 12,161 21,134 21,602 22,518 22,442 23,721 24,354 25,438 25,747 25,343 26,389 26,772b) Others 419 1,663 2,478 2,849 3,818 5,282 7,052 8,220 9,805 10,927 12,503 12,997
B. Non-Government Borrowing 1,957 4,475 5,472 6,582 7,596 8,745 10,242 12,686 15,151 16,811 17,215 17,445i) Concessional 0 0 0 0 0 0 0 0 0 0 0 0ii) Non-concessional 1,957 4,475 5,472 6,582 7,596 8,745 10,242 12,686 15,151 16,811 17,215 17,445
a) Public Sector 303 1,424 1,777 2,786 3,248 4,628 4,738 8,765 10,716 12,183 12,383 12,449i) IBRD 303 962 1,300 2,158 2,013 2,942 3,341 5,217 6,349 6,931 7,112 6,984ii) Others 0 462 477 628 1,235 1,686 1,397 3,548 4,367 5,252 5,271 5,465
b) Financial Institutions 1,270 2,345 2,883 2,718 2,559 2,464 2,391 2,171 2,723 3,099 3,369 3,638i) IBRD 872 1,720 1,791 1,667 1,605 1,643 1,618 1,011 1,057 999 1,015 995ii) Others 398 625 1,092 1,051 954 821 773 1,160 1,666 2,100 2,354 2,643
c) Private Sector 384 706 812 1,078 1,789 1,653 3,113 1,750 1,712 1,529 1,463 1,358i) IBRD 330 628 709 953 1,610 1,244 1,639 1,321 1,312 1,173 1,147 1,124ii) Others 54 78 103 125 179 409 1,474 429 400 356 316 234
II.BILATERAL 27,378 47,603 50,258 54,580 63,761 65,740 62,891 67,104 74,304 79,278 74,392 73,899A. Government borrowing 23,065 40,371 42,220 45,387 52,965 53,119 49,092 51,420 57,106 60,920 56,797 56,177
i) Concessional 23,065 40,371 42,220 45,387 52,965 52,078 48,165 50,583 56,425 59,380 55,499 55,304ii) Non-concessional 0 0 0 0 0 1,041 927 837 681 1,540 1,298 873
B. Non-Government borrowing 4,313 7,232 8,038 9,193 10,796 12,621 13,799 15,684 17,198 18,358 17,595 17,722(i) Concessional 514 928 1,243 1,453 1,896 3,088 3,409 1,770 2,738 4,022 5,584 6,242
a) Public Sector 0 0 0 190 654 376 1,054 192 526 1,488 2,967 3,625b) Financial Institutions 514 928 1,243 1,263 1,242 2,712 2,355 1,578 2,212 2,534 2,617 2,617c) Private Sector 0 0 0 0 0 0 0 0 0 0 0 0
48
ii) Non-concessional 3,799 6,304 6,795 7,740 8,900 9,533 10,390 13,914 14,460 14,336 12,011 11,480a) Public Sector 2,957 4,472 4,726 5,475 6,120 5,602 5,216 5,360 5,197 4,752 3,532 3,416b) Financial Institutions 527 1,236 1,571 1,718 1,883 2,197 2,436 4,216 4,363 4,151 3,623 3,549c) Private Sector 315 596 498 547 897 1,734 2,738 4,338 4,900 5,433 4,856 4,515
III. IMF 5,132 8,934 14,985 15,812 13,545 8,152 4,714 2,622 1,218 113 0 0
IV. EXPORT CREDIT 8,374 12,418 13,484 16,307 20,876 18,432 21,044 25,783 28,812 29,564 27,648 25,412a) Buyers’ credit 2,230 3,566 3,989 5,474 6,227 7,216 11,184 15,433 18,097 18,734 17,356 15,653b) Suppliers’ credit 933 1,380 2,050 4,129 6,432 5,382 4,791 5,453 5,532 5,582 5,406 4,887c) Export credit component
of bilateral credit 1,390 2,428 3,671 3,947 4,604 4,529 4,189 4,399 4,905 5,165 4,826 4,809d) Export credit for defence
purchases 3,821 5,044 3,774 2,757 3,613 1,305 880 498 278 83 60 63
V. COMMERCIAL BORROWINGS 19,727 35,711 36,367 38,782 40,915 47,642 51,454 67,086 89,019 86,963 112,454 114,965a) Commercial bank loans # 13,200 20,933 20,156 18,694 18,384 23,120 29,968 39,419 43,892 44,015 45,783 48,194b) Securitized borrowings ## 5,840 13,219 13,990 16,557 16,935 19,790 17,320 23,786 41,464 39,564 63,768 64,170c) Loans/securitized borrowings
etc., with multilateral/bilateralguarantee + IFC(W) 687 1,512 2,105 2,430 2,998 3,050 3,521 3,451 3,430 3,271 2,903 2,601
d) Self-Liquidating Loans 0 47 116 1,101 2,598 1,682 645 430 233 113 0 0
VI. NRI & FC(B&O) DEPOSITS@ 20,030 27,384 34,941 39,729 39,006 37,802 39,527 47,050 50,048 59,120 71,886 81,098(Above one year maturity)a) NRI deposits@@ 19,843 26,737 34,113 39,729 39,006 37,802 39,527 47,050 50,048 59,120 71,886 81,098b) FC (B&O)deposits 187 647 828 0 0 0 0 0 0 0 0 0
VII. RUPEE DEBT* 25,199 31,956 33,149 31,634 30,315 28,150 26,978 23,204 20,077 19,218 17,336 15,371a) Defence 22,875 28,796 30,177 28,735 27,603 25,602 24,590 20,976 18,004 17,290 15,573 13,640b) Civilian 2,324 3,160 2,972 2,899 2,712 2,548 2,388 2,228 2,073 1,928 1,763 1,731
VIII. TOTAL LONG TERMDEBT (I TO VII) 146,226 232,268 260,942 279,043 298,237 304,091 311,674 349,753 393,160 411,388 448,832 461,163
(Rs. crores)
End - March End Dec.
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001R2001QE
49
(Rs. crores)
End - March End Dec.
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001R2001QEIX. SHORT-TERM DEBT 16,775 20,642 19,804 11,375 13,448 16,637 24,153 19,929 18,137 17,162 16,229 13,255
a) NRI deposits (up to oneyear maturity)@ 7,018 6,517 8,131 4,078 7,176 9,896 13,547 8,657 8,852 5,983 3,773 4,418
b) FC(B&O) Deposits (up toone-year maturity) 328 924 2,433 1,672 0 0 0 0 0 0 0 0
c) Others (trade-related)** 9,429 13,201 9,240 5,625 6,272 6,741 10,606 11,272 9,285 11,179 12,456 8,837of which, short-term debtover 6 months 4,976 4,738 5,601 5,625 6,272 6,741 10,606 11,272 9,285 11,179 12,456 8,837
X. GRAND TOTAL ( VIII+IX ) 163,001 252,910 280,746 290,418 311,685 320,728 335,827 369,682 411,297 428,550 465,061 474,418Memo Items :GDP (in Rs crores atcurrent market prices)*** 568,674 653,117 748,367 859,220 1,012,770 1,188,012 1,368,208 1,522,547 1,740,935 1,929,641 2,087,988 2,291,525Debt to GDP 28.7 38.7 37.5 33.8 30.8 27.0 24.5 24.3 23.6 22.2 22.3 20.7Concessional Debt**** 74,627 114,245 124,818 128,724 141,139 143,741 141,970 146,117 158,219 166,671 167,428 170,121As % of Total Debt 45.8 45.2 44.5 44.3 45.3 44.8 42.3 39.5 38.5 38.9 36.0 35.9Short-Term Debt 16,775 20,642 19,804 11,375 13,448 16,637 24,153 19,929 18,137 17,162 16,229 13,255As % of Total Debt 10.3 8.2 7.1 3.9 4.3 5.2 7.2 5.4 4.4 4.0 3.5 2.8
R Revised
QE Quick Estimates
IFC(W): International Finance Corporation (Washington).
FC(B&O) Deposits: Foreign Currency (Banks & others) Deposits
# includes Financial Lease since 1996.
## includes India Development Bonds (IDBs), Resurgent India Bonds (RIBs), India Millenium Bonds (IMDs), also includes Foreign Currency Convertible Bonds (FCCBs) and net investment by 100% FII debt funds.FCCB debt has been adjusted since End-March, 1998 after netting out conversion into equity and redemptions.
@ Figures include accrued interest.
@@ The estimates for NRI deposits do not include Non- Resident Non-Repatriable Deposits (NRNRD) which is not repatriable. However, interest service for NRNRD, which is repatriable, is included as part of debtservice payments.
* Rupee denominated debt owed to Russia and payable through exports.
** This does not include Suppliers’ credits of up to 180 days.
*** GDP figures, at current market prices, are based on Revised Series of National Accounts Statistics, 2002 released by the Central Statistical Organisation.
**** The definition of concessional debt here includes concessional categories under multilateral and bilateral debt and rupee debt under item VII.
Source: Ministry of Finance (Department of Economic Affairs), Ministry of Defence,Reserve Bank of India and Securities & Exchange Board of India.
50
ANNEX 2
India’s External Debt Outstanding (Annual)
(US $ Million)
End - March End Dec.
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001R2001QE
I. MULTILATERAL 20,900 23,090 25,008 26,263 28,542 28,616 29,218 29,553 30,534 31,438 31,107 31,233A. Government Borrowing 19,887 21,651 23,247 24,158 26,127 26,059 26,369 26,344 26,967 27,584 27,417 27,611
(i) Concessional 13,377 14,320 15,503 16,044 17,777 17,576 17,636 17,836 18,596 19,269 19,080 19,353a) IDA 13,052 13,974 15,169 15,721 17,438 17,263 17,337 17,541 18,301 18,964 18,811 19,079b) Others 325 346 334 323 339 313 299 295 295 305 269 274
ii) Non-concessional 6,510 7,331 7,744 8,114 8,350 8,483 8,733 8,508 8,371 8,315 8,337 8,258a) IBRD 6,293 6,796 6,947 7,203 7,136 6,938 6,772 6,430 6,062 5,810 5,657 5,559b) Others 217 535 797 911 1,214 1,545 1,961 2,078 2,309 2,505 2,680 2,699
B. Non-Government Borrowing 1,013 1,439 1,761 2,105 2,415 2,557 2,849 3,209 3,567 3,854 3,690 3,622(i) Concessional 0 0 0 0 0 0 0 0 0 0 0 0ii) Non-concessional 1,013 1,439 1,761 2,105 2,415 2,557 2,849 3,209 3,567 3,854 3,690 3,622a) Public Sector 157 458 572 891 1,033 1,353 1,318 2,216 2,523 2,793 2,654 2,585i) IBRD 157 308 418 690 640 860 929 1,319 1,495 1,589 1,525 1,450ii) Others 0 150 154 201 393 493 389 897 1,028 1,204 1,129 1,135b) Financial Institutions 657 754 928 869 813 721 665 550 641 710 722 755i) IBRD 451 553 576 533 510 481 450 256 249 229 218 206ii) Others 206 201 352 336 303 240 215 294 392 481 504 549c) Private Sector 199 227 261 345 569 483 866 443 403 351 314 282i) IBRD 171 202 228 305 512 364 456 334 309 269 246 234ii) Others 28 25 33 40 57 119 410 109 94 82 68 48
II.BILATERAL 14,168 15,466 16,154 17,450 20,270 19,213 17,494 16,969 17,499 18,175 15,947 15,338A. Government borrowing 11,936 13,099 13,578 14,519 16,841 15,535 13,652 12,998 13,447 13,966 12,175 11,665
(i) Concessional 11,936 13,099 13,578 14,519 16,841 15,232 13,394 12,786 13,286 13,613 11,897 11,484ii) Non-concessional 0 0 0 0 0 303 258 212 161 353 278 181
B. Non-Government borrowing 2,232 2,367 2,576 2,931 3,429 3,678 3,842 3,971 4,052 4,209 3,772 3,673(i) Concessional 266 348 400 465 603 903 948 448 645 922 1,197 1,296
a) Public Sector 0 0 0 61 208 110 293 49 124 341 636 753b) Financial Institutions 266 348 400 404 395 793 655 399 521 581 561 543c) Private Sector 0 0 0 0 0 0 0 0 0 0 0 0
51
ii) Non-concessional 1,966 2,019 2,176 2,466 2,826 2,775 2,894 3,523 3,407 3,287 2,575 2,377a) Public Sector 1,530 1,432 1,513 1,745 1,943 1,631 1,453 1,358 1,224 1,089 758 707b) Financial Institutions 273 396 503 547 598 639 678 1,067 1,028 952 776 735c) Private Sector 163 191 160 174 285 505 763 1,098 1,155 1,246 1,041 935
III. IMF 2,623 3,451 4,799 5,040 4,300 2,374 1,313 664 287 26 0 0
IV. EXPORT CREDIT 4,301 3,990 4,322 5,203 6,629 5,376 5,861 6,526 6,789 6,780 5,928 5,263a) Buyers’ credit 1,154 1,142 1,277 1,745 1,977 2,101 3,116 3,908 4,265 4,297 3,721 3,240b) Suppliers’ credit 483 442 656 1,316 2,042 1,567 1,335 1,380 1,303 1,280 1,159 1,011c) Export credit component of
bilateral credit 719 791 1,181 1,263 1,464 1,325 1,165 1,112 1,155 1,184 1,035 999d) Export credit for defence
purchases 1,945 1,615 1,208 879 1,146 383 245 126 66 19 13 13
V. COMMERCIAL BORROWINGS 10,209 11,715 11,643 12,363 12,991 13,873 14,335 16,986 20,978 19,943 24,111 23,798a) Commercial bank loans # 6,831 6,704 6,453 5,959 5,837 6,731 8,349 9,981 10,343 10,094 9,816 9,976b) Securitized borrowings ## 3,022 4,512 4,479 5,278 5,377 5,751 4,825 6,022 9,772 9,073 13,672 13,283c) Loans/securitized borrowings 356 484 674 775 952 888 981 874 808 750 623 539
etc., with multilateral/bilateralguarantee + IFC(W)
d) Self-Liquidating Loans 0 15 37 351 825 503 180 109 55 26 0 0
VI. NRI & FC(B&O) DEPOSITS@ 10,209 10,083 11,141 12,665 12,383 11,011 11,012 11,913 11,794 13,559 15,414 16,834(Above one year maturity)a) NRI deposits 10,114 9,833 10,876 12,665 12,383 11,011 11,012 11,913 11,794 13,559 15,414 16,834b) FC(B&O)deposits 95 250 265 0 0 0 0 0 0 0 0 0
VII. RUPEE DEBT* 12,847 10,420 10,616 10,084 9,624 8,233 7,511 5,874 4,731 4,406 3,717 3,190a) Defence 11,645 9,222 9,661 9,160 8,763 7,488 6,847 5,311 4,243 3,964 3,339 2,831b) Civilian 1,202 1,198 955 924 861 745 664 563 488 442 378 359
VIII. TOTAL LONG TERMDEBT (I TO VII) 83,801 85,285 90,023 92,695 99,008 93,730 93,470 93,531 96,886 98,263 99,704 98,407
(US $ Million)
End - March End Dec.
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001R2001QE
52
(US $ Million)
End - March End Dec.
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001R2001QEIX. SHORT-TERM DEBT 8,544 7,070 6,340 3,627 4,269 5,034 6,726 5,046 4,274 3,936 3,480 2,751
a) NRI deposits (up to oneyear maturity)@ 3,577 2,486 2,603 1,300 2,278 2,883 3,773 2,192 2,086 1,372 809 917
b) FC(B&O) Deposits (up to one-year maturity) 167 357 779 533 0 0 0 0 0 0 0 0
c) Others (trade-related)** 4,800 4,227 2,958 1,794 1,991 2,151 2,953 2,854 2,188 2,564 2,671 1,834of which, short-term debtover 6 months 2,533 1,517 1,793 1,794 1,991 2,151 2,953 2,854 2,188 2,564 2,671 1,834
X. GRAND TOTAL (VIII+IX) 83,801 85,285 90,023 92,695 99,008 93,730 93,470 93,531 96,886 98,263 99,704 98,407Memo Items :Debt to GDP*** 28.7 38.7 37.5 22.8 30.8 27.0 24.5 24.3 23.6 22.2 22.3 20.7Concessional Debt**** 38,426 38,187 40,097 41,112 44,845 41,944 39,489 36,944 37,258 38,210 35,891 35,323As % of Total Debt 45.9 44.8 44.5 44.4 45.3 44.7 42.2 39.5 38.5 38.9 36.0 35.9Short-Term Debt 8,544 7,070 6,340 3,627 4,269 5,034 6,726 5,046 4,274 3,936 3,480 2,751As % of Total Debt 10.2 8.3 7.0 3.9 4.3 5.4 7.2 5.4 4.4 4.0 3.5 2.8External Debt from official creditors $ 53,202 54,833 58,966 60,979 65,346 60,144 56,946 54,298 54,272 55,248 51,819 50,773Share of official creditors 63.5 64.3 65.5 65.8 66.0 64.2 60.9 58.1 56.0 56.2 52.0 51.6External Debt from private creditors $$ 30,599 30,452 31,057 31,716 33,662 33,586 36,524 39,233 42,614 43,015 47,885 47,634Share of private creditors 36.5 35.7 34.5 34.2 34.0 35.8 39.1 41.9 44.0 43.8 48.0 48.4
R RevisedQE Quick EstimatesIFC(W): International Finance Corporation (Washington).FC(B&O) Deposits : Foreign Currency (Banks & others) Deposits# includes Financial Lease since 1996.## includes India Development Bonds (IDBs), Resurgent India Bonds (RIBs), India Millenium Bonds (IMDs), also includes Foreign Currency Convertible Bonds (FCCBs) and net investment by 100% FII debt funds.
FCCB debt has been adjusted since End-March, 1998 after netting out conversion into equity and redemptions.@ Figures include accrued interest.@@ The estimates for NRI deposits do not include Non- Resident Non-Repatriable Deposits (NRNRD) which is not repatriable. However, interest service for NRNRD, which is repatriable, is included as part of debt
service payments.* Rupee denominated debt owed to Russia and payable through exports.** This does not include Suppliers’ credits of up to 180 days.*** Debt-GDP ratios are derived from Rupee figures. GDP figures, at current market prices, are based on Revised Series of National Accounts Statistics, 2002 released by the Central Statistical Organisation.**** The definition of concessional debt here includes concessional categories under multilateral and bilateral debt and Rupee Debt under item VII.$ The term official creditors here include Multilateral; Bilateral; IMF; Export credit component of bilateral credit and for defence purchases and Rupee Debt.$$ The term private creditors here include components of Buyer’s credit and Supplier’s Credit under Export credit; Commercial Borrowings NRI & FC(B&O) Deposits and Short term Debt.Source : Ministry of Finance (Department of Economic Affairs), Ministry of Defence,Reserve Bank of India and Securities & Exchange Board of India.
53
ANNEX 3
India’s External Debt Outstanding (Quarterly)
(Rs. crore)
End - March
Sept., Dec., Mar., June, Sept., Dec., Mar., June, Sept., Dec.,1999 1999 2000 2000 2000R 2000R 2001R 2001R 2001R2001QE
I. MULTILATERAL 134,563 135,480 137,132 139,701 141,482 145,346 145,116 145,982 151,131 150,418A. Government Borrowing 118,555 118,739 120,321 122,521 124,618 127,916 127,901 128,583 133,595 132,973
(i) Concessional 82,916 82,787 84,051 86,112 87,449 89,537 89,009 89,345 93,583 93,204a) IDA 81,581 81,492 82,721 84,880 86,166 88,244 87,753 88,083 92,236 91,884b) Others 1,335 1,295 1,330 1,232 1,283 1,293 1,256 1,262 1,347 1,320
ii) Non-concessional 35,639 35,952 36,270 36,409 37,169 38,379 38,892 39,238 40,012 39,769a) IBRD 25,262 25,133 25,343 25,137 25,575 25,899 26,389 26,387 26,921 26,772b) Others 10,377 10,819 10,927 11,272 11,594 12,480 12,503 12,851 13,091 12,997
B. Non-Government Borrowing 16,008 16,741 16,811 17,180 16,864 17,430 17,215 17,399 17,536 17,445(i) Concessional 0 0 0 0 0 0 0 0 0 0ii) Non-concessional 16,008 16,741 16,811 17,180 16,864 17,430 17,215 17,399 17,536 17,445
a) Public Sector 11,520 11,979 12,183 12,474 12,090 12,396 12,383 12,413 12,590 12,449i) IBRD 6,771 6,854 6,931 7,073 7,154 7,192 7,112 7,048 7,036 6,984ii) Others 4,749 5,125 5,252 5,401 4,936 5,204 5,271 5,365 5,554 5,465
b) Financial Institutions 2,799 3,175 3,099 3,128 3,240 3,503 3,369 3,534 3,564 3,638i) IBRD 1,034 1,025 999 1,002 1,026 1,015 1,015 998 1,020 995ii) Others 1,765 2,150 2,100 2,126 2,214 2,488 2,354 2,536 2,544 2,643
c) Private Sector 1,689 1,587 1,529 1,578 1,534 1,531 1,463 1,452 1,382 1,358i) IBRD 1,300 1,220 1,173 1,201 1,190 1,202 1,147 1,155 1,119 1,124ii) Others 389 367 356 377 344 329 316 297 263 234
II.BILATERAL 80,922 80,944 79,278 79,877 79,482 79,163 74,392 74,416 79,325 73,899A. Government borrowing 62,543 62,503 60,920 61,303 61,434 60,700 56,797 56,461 60,659 56,177
(i) Concessional 60,984 60,970 59,380 60,060 60,152 59,399 55,499 55,606 59,792 55,304ii) Non-concessional 1,559 1,533 1,540 1,243 1,282 1,301 1,298 855 867 873
B. Non-Government borrowing 18,379 18,441 18,358 18,574 18,048 18,463 17,595 17,955 18,666 17,722(i) Concessional 3,425 3,713 4,022 4,201 4,289 5,801 5,584 6,126 6,708 6,242
a) Public Sector 883 1,089 1,488 1,588 1,641 2,961 2,967 3,460 3,826 3,625b) Financial Institutions 2,542 2,624 2,534 2,613 2,648 2,840 2,617 2,666 2,882 2,617c) Private Sector 0 0 0 0 0 0 0 0 0 0
54
ii) Non-concessional 14,954 14,728 14,336 14,373 13,759 12,662 12,011 11,829 11,958 11,480a) Public Sector 5,217 5,024 4,752 4,721 4,719 3,789 3,532 3,510 3,566 3,416b) Financial Institutions 4,399 4,285 4,151 4,145 4,062 3,796 3,623 3,564 3,680 3,549c) Private Sector 5,338 5,419 5,433 5,507 4,978 5,077 4,856 4,755 4,712 4,515
III. IMF 581 229 113 0 0 0 0 0 0 0
IV. EXPORT CREDIT 30,099 30,447 29,564 30,697 29,285 29,056 27,648 26,028 26,700 25,412a) Buyers’ credit 18,835 19,387 18,734 19,884 18,145 18,078 17,356 16,029 16,177 15,653b) Suppliers’ credit 5,783 5,674 5,582 5,529 5,848 5,750 5,406 5,105 5,261 4,887c) Export credit component of
bilateral credit 5,303 5,301 5,165 5,223 5,231 5,165 4,826 4,835 5,199 4,809d) Export credit for defence
purchases 178 85 83 61 61 63 60 59 63 63
V. COMMERCIAL BORROWINGS 90,631 88,278 86,963 86,760 89,505 114,445 112,454 112,235 113,118 114,965a) Commercial bank loans # 46,410 45,657 44,015 44,412 45,867 46,372 45,783 45,912 45,999 48,194b) Securitized borrowings ## 40,623 39,119 39,564 38,998 40,427 64,959 63,768 63,688 64,417 64,170c) Loans/securitized borrowings
etc., with multilateral/bilateralguarantee + IFC(W) 3,419 3,347 3,271 3,261 3,147 3,081 2,903 2,635 2,702 2,601
d) Self-Liquidating Loans 179 155 113 89 64 33 0 0 0 0
VI. NRI & FC(B&O) DEPOSITS@ 52,110 55,156 59,120 62,971 67,042 70,996 71,886 73,989 77,345 81,098(Above one year maturity)a) NRI deposits@@ 52,110 55,156 59,120 62,971 67,042 70,996 71,886 73,989 77,345 81,098b) FC(B&O)deposits 0 0 0 0 0 0 0 0 0 0
VII. RUPEE DEBT* 19,780 19,641 19,218 17,367 17,330 17,715 17,336 15,283 15,547 15,371a) Defence 17,758 17,830 17,290 15,441 15,434 15,831 15,573 13,550 13,815 13,640b) Civilian 2,022 1,811 1,928 1,926 1,896 1,884 1,763 1,733 1,732 1,731
VIII. TOTAL LONG TERMDEBT (I TO VII) 408,686 410,175 411,388 417,373 424,126 456,721 448,832 447,933 463,166 461,163
(Rs. crore)
End - March
Sept., Dec., Mar., June, Sept., Dec., Mar., June, Sept., Dec.,1999 1999 2000 2000 2000R 2000R 2001R 2001R 2001R2001QE
55
IX. SHORT-TERM DEBT 20,439 18,516 17,162 18,691 20,440 16,775 16,229 16,229 14,869 13,255a) NRI deposits (up to one year
maturity)@9,897 7,922 5,983 5,421 4,207 2,524 3,773 3,773 4,216 4,418b) FC(B&O) Deposits (up to one-
year maturity) 0 0 0 0 0 0 0 0 0 0c) Others (trade-related)** 10,542 10,594 11,179 13,270 16,233 14,251 12,456 12,456 10,653 8,837
of which, short-term debtover 6 months 10,542 10,594 11,179 13,270 16,233 14,252 12,456 12,456 10,653 8,837
X. GRAND TOTAL ( VIII+IX ) 429,125 428,691 428,550 436,064 444,566 473,496 465,061 464,162 478,035 474,418Memo Items :Concessional Debt*** 167,105 167,111 166,671 167,740 169,220 172,452 167,428 166,360 175,630 170,121As % of Total Debt 38.9 39.0 38.9 38.5 38.1 36.4 36.0 35.8 36.7 35.9Short-Term Debt 20,439 18,516 17,162 18,691 20,440 16,775 16,229 16,229 14,869 13,255As % of Total Debt 4.8 4.3 4.0 4.3 4.6 3.5 3.5 3.5 3.1 2.8
R Revised
QE Quick Estimates
IFC(W): International Finance Corporation (Washington).
FC(B&O) Deposits : Foreign Currency (Banks & others) Deposits
# includes Financial Lease since 1996.
## includes India Development Bonds (IDBs), Resurgent India Bonds (RIBs), India Millenium Bonds (IMDs). also includes Foreign Currency Convertible Bonds (FCCBs) and net investment by 100% FII debt funds.FCCB debt has been adjusted since End-March, 1998 after netting out conversion into equity and redemptions.
@ Figures include accrued interest.
@@ The estimates for NRI deposits do not include Non- Resident Non-Repatriable Deposits (NRNRD) which is not repatriable. However, interest service for NRNRD, which is repatriable, is included as part of debtservice payments.
* Rupee denominated debt owed to Russia and payable through exports.
** This does not include Suppliers’ credits of up to 180 days.
*** The definition of concessional debt here includes concessional categories under multilateral and bilateral debt and rupee debt under item VII.
Source : Ministry of Finance (Department of Economic Affairs), Ministry of Defence,Reserve Bank of India and Securities & Exchange Board of India.
(Rs. crore)
End - March
Sept., Dec., Mar., June, Sept., Dec., Mar., June, Sept., Dec.,1999 1999 2000 2000 2000R 2000R 2001R 2001R 2001R2001QE
56
ANNEX 4
India’s External Debt Outstanding (Quarterly)
(US $ million)
End - MarchSept., Dec., Mar., June, Sept., Dec., Mar., June, Sept., Dec.,1999 1999 2000 2000 2000R 2000R 2001R 2001R 2001R2001QE
I. MULTILATERAL 30,836 31,102 31,438 31,254 30,637 31,118 31,107 31,034 31,545 31,233A. Government Borrowing 27,167 27,259 27,584 27,410 26,986 27,386 27,417 27,335 27,885 27,611
(i) Concessional 19,000 19,005 19,269 19,265 18,937 19,169 19,080 18,994 19,533 19,353a) IDA 18,694 18,708 18,964 18,989 18,659 18,892 18,811 18,725 19,252 19,079b) Others 306 297 305 276 278 277 269 269 281 274
ii) Non-concessional 8,167 8,254 8,315 8,145 8,049 8,217 8,337 8,341 8,352 8,258a) IBRD 5,789 5,770 5,810 5,623 5,538 5,545 5,657 5,609 5,619 5,559b) Others 2,378 2,484 2,505 2,522 2,511 2,672 2,680 2,732 2,733 2,699
B. Non-Government Borrowing 3,669 3,843 3,854 3,844 3,651 3,732 3,690 3,699 3,660 3,622(i) Concessional 0 0 0 0 0 0 0 0 0 0ii) Non-concessional 3,669 3,843 3,854 3,844 3,651 3,732 3,690 3,699 3,660 3,622
a) Public Sector 2,640 2,750 2,793 2,791 2,618 2,654 2,654 2,639 2,628 2,585i) IBRD 1,552 1,573 1,589 1,582 1,549 1,540 1,525 1,498 1,469 1,450ii) Others 1,088 1,177 1,204 1,209 1,069 1,114 1,129 1,141 1,159 1,135
b) Financial Institutions 642 728 710 700 701 750 722 751 744 755i) IBRD 237 235 229 224 222 217 218 212 213 206ii) Others 405 493 481 476 479 533 504 539 531 549
c) Private Sector 387 365 351 353 332 328 314 309 288 282i) IBRD 298 280 269 269 258 257 246 246 233 234ii) Others 89 85 82 84 74 71 68 63 55 48
II. BILATERAL 18,545 18,586 18,175 17,870 17,218 16,945 15,947 15,820 16,560 15,338A. Government borrowing 14,332 14,350 13,966 13,714 13,304 12,994 12,175 12,003 12,661 11,665
(i) Concessional 13,974 13,997 13,613 13,436 13,026 12,716 11,897 11,821 12,480 11,484ii) Non-concessional 358 353 353 278 278 278 278 182 181 181
B. Non-Government borrowing 4,213 4,236 4,209 4,156 3,914 3,951 3,772 3,817 3,899 3,673(i) Concessional 785 852 922 940 929 1,242 1,197 1,302 1,400 1,296
a) Public Sector 202 250 341 355 355 634 636 735 798 753b) Financial Institutions 583 602 581 585 574 608 561 567 602 543c) Private Sector 0 0 0 0 0 0 0 0 0 0
57
ii) Non-concessional 3,428 3,384 3,287 3,216 2,985 2,709 2,575 2,515 2,499 2,377a) Public Sector 1,196 1,154 1,089 1,056 1,024 811 758 746 745 707b) Financial Institutions 1,008 984 952 927 880 812 776 758 769 735c) Private Sector 1,224 1,246 1,246 1,233 1,081 1,086 1,041 1,011 985 935
III. IMF 133 53 26 0 0 0 0 0 0 0
IV. EXPORT CREDIT 6,903 6,997 6,780 6,870 6,355 6,217 5,928 5,533 5,579 5,263a) Buyers’ credit 4,320 4,456 4,297 4,450 3,939 3,868 3,721 3,407 3,381 3,240b) Suppliers’ credit 1,326 1,304 1,280 1,238 1,270 1,230 1,159 1,085 1,100 1,011c) Export credit component of
bilateral credit 1,216 1,217 1,184 1,168 1,133 1,106 1,035 1,028 1,085 999d) Export credit for defence
purchases 41 20 19 14 13 13 13 13 13 13
V. COMMERCIAL BORROWINGS 20,787 20,292 19,943 19,418 19,430 24,483 24,111 23,859 23,649 23,798a) Commercial bank loans # 10,645 10,495 10,094 9,940 9,957 9,920 9,816 9,760 9,613 9,976b) Securitized borrowings ## 9,317 8,992 9,073 8,728 8,776 13,897 13,672 13,539 13,471 13,283c) Loans/securitized borrowings
etc., with multilateral/bilateralguarantee + IFC(W) 784 769 750 730 683 659 623 560 565 539
d) Self-Liquidating Loans 41 36 26 20 14 7 0 0 0 0
VI. NRI & FC(B&O) DEPOSITS@ 11,952 12,678 13,559 14,094 14,553 15,188 15,414 15,729 16,164 16,834(Above one year maturity)a) NRI deposits 11,952 12,678 13,559 14,094 14,553 15,188 15,414 15,729 16,164 16,834b) FC(B&O)deposits 0 0 0 0 0 0 0 0 0 0
VII. RUPEE DEBT* 4,535 4,516 4,406 3,887 3,761 3,789 3,717 3,249 3,248 3,190a) Defence 4,072 4,100 3,964 3,456 3,350 3,386 3,339 2,880 2,886 2,831b) Civilian 463 416 442 431 411 403 378 369 362 359
VIII. TOTAL LONG TERMDEBT (I TO VII) 93,691 94,224 94,327 93,393 91,954 97,740 96,224 95,224 96,745 95,656
(US $ million)
End - March
Sept., Dec., Mar., June, Sept., Dec., Mar., June, Sept., Dec.,1999 1999 2000 2000 2000R 2000R 2001R 2001R 2001R2001QE
58
IX. SHORT-TERM DEBT 4,688 4,256 3,936 4,183 4,438 3,589 3,480 3,141 3,107 2,751a) NRI deposits (up to one year maturity)@ 2,270 1,821 1,372 1,213 914 540 809 809 881 917b) FC(B&O) Deposits (up to one-year maturity) 0 0 0 0 0 0 0 0 0 0c) Others (trade-related)** 2,418 2,435 2,564 2,970 3,524 3,049 2,671 2,332 2,226 1,834
of which, short-term debt over 6 months 2,418 2,435 2,564 2,970 3,524 3,049 2,671 2,332 2,226 1,834
X. GRAND TOTAL (VIII+IX) 98,379 98,480 98,263 97,576 96,392 101,329 99,704 98,365 99,852 98,407Memo Items :Concessional Debt*** 38,294 38,370 38,210 37,528 36,653 36,916 35,891 35,366 36,661 35,323As % of Total Debt 38.9 39.0 38.9 38.5 38.0 36.4 36.0 36.0 36.7 35.9Short-Term Debt 4,688 4,256 3,936 4,183 4,438 3,589 3,480 3,141 3,107 2,751As % of Total Debt 4.8 4.3 4.0 4.3 4.6 3.5 3.5 3.2 3.1 2.8
R Revised
QE Quick Estimates
IFC(W): International Finance Corporation (Washington).
FC(B&O) Deposits : Foreign Currency (Banks & others) Deposits
# includes Financial Lease since 1996.
## includes India Development Bonds (IDBs), Resurgent India Bonds (RIBs), India Millenium Bonds (IMDs). also includes Foreign Currency Convertible Bonds (FCCBs) and net investment by 100% FII debt funds. FCCB debthas been adjusted since End-March, 1998 after netting out conversion into equity and redemptions.
@ Figures include accrued interest.
@@ The estimates for NRI deposits do not include Non- Resident Non-Repatriable Deposits (NRNRD) which is not repatriable. However, interest service for NRNRD, which is repatriable, is included as part of debt servicepayments.
* Rupee denominated debt owed to Russia and payable through exports.
** This does not include Suppliers’ credits of up to 180 days.
*** The definition of concessional debt here includes concessional categories under multilateral and bilateral debt and rupee debt under item VII.
Source : Ministry of Finance (Department of Economic Affairs), Ministry of Defence,Reserve Bank of India and Securities & Exchange Board of India.
(US $ million)
End - March
Sept., Dec., Mar., June, Sept., Dec., Mar., June, Sept., Dec.,1999 1999 2000 2000 2000R 2000R 2001R 2001R 2001R2001QE
59
ANNEX 5
External Debt by Borrower Categories
(US Dollar million)
End - March End December
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001R 20002001QE
I. Government Debt: 49,957 51,027 54,629 55,943 59,502 53,095 49,060 46,520 46,137 46,852 44,027 44,92743,196(59.6) (59.8) (60.7) (60.4) (60.1) (56.6) (52.5) (49.7) (47.6) (47.7) (44.2) (44.3)(43.9)
of which long-term: 49,957 51,027 54,629 55,943 59,502 53,095 49,060 46,520 46,137 46,852 44,027 44,92743,196
1 Government A/c. 33,744 36,739 38,961 40,864 45,293 43,361 41,592 40,805 41,896 42,823 40,727 41,61140,4522 Other Govt. Debt 16,213 14,288 15,668 15,079 14,209 9,734 7,468 5,715 4,241 4,029 3,300 3,3162,744
II. Non-Govt. Debt (A+B): 33,844 34,258 35,394 36,752 39,506 40,635 44,410 47,011 50,749 51,414 55,677 56,40255,211(40.4) (40.2) (39.3) (39.6) (39.9) (43.4) (47.5) (50.3) (52.4) (52.3) (55.8) (55.7)(56.1)
A. of which long-term: 25,300 27,188 29,054 33,125 35,237 35,601 37,684 41,965 46,475 47,478 52,197 52,81352,4601 Financial Sector* 0 0 0 0 0 0 0 20,113 23,699 25,105 29,726 29,93330,7112 Public Sector** 0 0 0 0 0 0 0 9,753 9,284 9,316 10,328 10,772 9,3853 Private Sector*** 0 0 0 0 0 0 0 12,099 13,492 13,057 12,143 12,10812,364
B. of which short-term: 8,544 7,070 6,340 3,627 4,269 5,034 6,726 5,046 4,274 3,936 3,480 3,5892,751(10.2) (8.3) (7.0) (3.9) (4.3) (5.4) (7.2) (5.4) (4.4) (4.0) (3.5) (3.5) (2.8)
III. (I+II)Total External Debt 83,801 85,285 90,023 92,695 99,008 93,730 93,470 93,531 96,886 98,266 99,704 101,329 98,407(100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0)(100.0)
Note : The definition of Government debt here includes debt on Government Account maintained by the Controller of Aid Accounts and Audit, Ministry of Finance. Other Government debt include IMF, Defence Debt and FII
investment in Government debt securities. All others, including short-term debt are shown as part of non-Government debt. Debt of Defence public sector enterprises is included as part of non-Government debt from
1996 onwards.
* : Financial sector debt represent borrowings by external debt of commercial banks and financial institutions. Long-term NRI Deposits are included in the financial sector.
** : Public sector debt represents borrowings of non- financial public sector enterprises.
*** : Private sector debt represents borrowings of non- financial private sector enterprises.R : Revised
QE : Quick Estimate
Figures in parentheses represent share of components in total external debt.
60
1 External Assistance# 2315 2447 2541 2968 3186 3691 3283 3229 3270 3057 3444 2577 29202273 Repayments 1187 1329 1443 1645 1748 2192 1922 1966 2051 1941 2338 1639 20191514 Interest 1128 1118 1098 1323 1438 1499 1361 1263 1219 1116 1106 938 901759
2 External Commercial 3414 2830 2707 3232 4290 5248 5959 4934 5070 5800 7057 5495 50874268Borrowings*
Repayments 2004 1677 1525 1978 2812 3868 4605 3550 3477 4147 5362 3879 38563110Interest 1410 1153 1182 1254 1478 1380 1354 1384 1593 1653 1695 1616 12311158
3 I. M. F. 778 697 614 387 1368 1860 1061 667 419 267 0 240 0 0 Repayments 644 459 335 134 1146 1715 975 618 393 260 0 234 00
Interest 134 238 279 253 222 145 86 49 26 7 0 6 0 0
4 NRI Deposits** 1282 1036 918 905 1046 1247 1627 1807 1719 1013 1021 771 758744Interest 1282 1036 918 905 1046 1247 1627 1807 1719 1013 1021 771 758744
5 Rupee Debt Service 1193 1240 878 1053 983 952 727 767 802 711 617 570 461389Repayments 1193 1240 878 1053 983 952 727 767 802 711 617 570 461389
Total Debt Service Payments 8982 8250 7658 8545 10873 12998 12657 11404 11280 10848 12139 9653 92267674Repayments 5028 4705 4181 4810 6689 8727 8229 6901 6723 7059 8317 6322 63365013Interest 3954 3545 3477 3735 4184 4271 4428 4503 4557 3789 3822 3331 28902661
Current Receipts*** 25478 27307 27839 33629 41988 49625 55115 58545 59760 67472 79003 48321 5759758889Debt Service Ratio (%) 35.3 30.2 27.5 25.4 25.9 26.2 23.0 19.5 18.9 16.1 15.4 20.0 16.013.0Interest to Current Receipts 15.5 13.0 12.5 11.1 10.0 8.6 8.0 7.7 7.6 5.6 4.8 6.9 5.04.5Ratio(%)
Note : Figures for debt service and interest payments is calculated on cash payment basis, except for Non-resident Indian Deposits for which accrual method is used. The estimates may, therefore, differe from BOP datacompiliation methodology.
R : Revised QE. : Quick Estimates# : Inclusive of non-Government account figures supplied by the office of Controller of Aid Accounts & Audit, Ministry of Finance.* : Excludes accrued interest on India Development Bonds (IDBs). For 1996-97, only that component of principal repayment on IDBs is taken as debt service which is redeemed in foreign exchange.** : Interest payments on NRI Deposits, include both long term and short term external debt component of NRI Deposits.*** : Current Receipts excludes official transfers.
ANNEX 6
India’s External Debt Service Payment
(US Dollar million)
Full Financial Year (April 01 - March 31) (April 01 - December 31)
1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 R 1999 20002001QE
61
ANNEX 7
Debt Service by Creditor Categories(US Dollar million)
Full Financial Year (April 01 - March 31) (April 01 - December 31)
1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01R 1999 20002001QE
Multilateral : 2503 2186 2212 2175 2043 2411 1692 2068 1556Repayments 1435 1211 1299 1303 1261 1629 1017 1422 1005Interest 1069 975 913 872 782 782 675 646 551
Bilateral : 1565 1537 1795 1716 1638 1593 1400 1245 1132Repayments 982 988 1269 1204 1130 1108 991 891 846Interest 583 549 526 512 508 485 409 354 286
IMF : 1860 1061 667 419 267 0 240 0 0Repayments 1715 975 618 393 260 0 234 0 0Interest 145 86 49 26 7 0 6 0 0
Export Credit : 1135 1570 1188 1256 1108 1670 1334 1212 980Repayments 792 1138 855 868 758 1302 956 915 760Interest 343 432 333 388 350 368 378 297 220
Commercial Borrowings: 3735 3949 2968 3193 4068 4827 3626 3482 2873Repayments 2851 3190 2093 2153 2939 3661 2534 2647 2013Interest 884 759 875 1040 1129 1166 1092 835 860
NRI Deposits : 1247 1627 1807 1719 1013 1021 771 758 744Interest* 1247 1627 1807 1719 1013 1021 771 758 744
Rupee Debt : 952 727 767 802 711 617 570 461 389
Total Debt : 12998 12657 11404 11280 10848 12139 9633 9226 7674Repayments 8727 8229 6901 6723 7059 8317 6302 6336 5013Interest 4271 4428 4503 4557 3789 3822 3331 2890 2661
Current Receipts 49625 55115 58545 59760 67472 79003 48321 57597 58889Debt Service Ratio (%) 26.2 23.0 19.5 18.9 16.1 15.4 19.9 16.0 13.0Interest to Current Receipts Ratio 8.6 8.0 7.7 7.6 5.6 4.8 6.9 5.0 4.5
Note : Figures for debt service and interest payments is calculated on cash payment basis except for Non-Resident Indian Deposits for which accrual method is used. The estimates may, therefore, differ from BOP datacompiliation methodology.
* : Interest payments on NRI Deposits include both long term and short term external debt component of NRI Deposits.R : Revised QE : Quick Estmiate