India’s external debt has risen by 10.7% to reach USD 717.9 billion at the end of December 2024, up from USD 648.7 billion in December 2023, according to the latest data released by the Finance Ministry. On a quarter-on-quarter basis, the external debt increased by 0.7%, from USD 712.7 billion at the end of September 2024.
The external debt-to-GDP ratio stood at 19.1% by the end of December 2024, compared to 19% in September 2024, the report indicated.
A significant portion of the increase in external debt is attributed to a valuation effect, primarily due to the appreciation of the US dollar against the rupee and other major currencies, including the yen, euro, and Special Drawing Rights (SDR). This contributed an additional USD 12.7 billion during the quarter ending December 2024. Without the valuation impact, the increase in external debt would have been USD 17.9 billion for the quarter, a higher jump compared to the USD 5.2 billion increase seen from September to December 2024.
Debt composition
The largest portion of India’s external debt remains US dollar-denominated debt, which accounted for 54.8% of the total debt by the end of December 2024. Other components include debt in Indian Rupees (30.6%), Japanese Yen (6.1%), SDR (4.7%), and Euro (3%).
While the central government’s external debt declined, the non-government sector saw an increase, with non-financial corporations holding 36.5% of the total external debt. This was followed by deposit-taking corporations (excluding the central bank) at 27.8%, the central government at 22.1%, and other financial corporations at 8.7%.
Debt servicing
Loans continued to be the largest component of India’s external debt, comprising 33.6%, followed by currency and deposits at 23.1%, trade credit and advances at 18.8%, and debt securities at 16.8%.
In terms of debt servicing, the ratio of principal repayments plus interest payments stood at 6.6% of current receipts by December 2024, slightly down from 6.7% at the end of September 2024.