Discuss the Composition of India’s External Debt and its Growth in the Post-Reform Period.
The amount of India’s external debt has been increasing steadily in the post—reform period. All the dimensions of India’s external debt, long-term as well as short-term, foreign currency debt as well as rupee debt, external assistance as well as commercial borrowing, public as well as private borrowings. Institutional debt as also non-resident Indian deposits are presented in US dollars and in Indian rupees. The share of borrowing from the I.M.F. steadily increased from about 2 percent in 1990 to about 5.5 percent in 1994 but declined marginally to about 4.5 percent in 1995.
Out of the total external debt, multilateral and bilateral assistance together accounted for about 43 percent in 1990, which accounted for almost 50 percent of the total external debt in 1995. Non-resident and Foreign currency deposits, of long and short-term duration increased. The component of rupee debt has marked a steady decline in total external debt from about 15 percent in 1990 to about 10 percent in 1995. The key debt indicators have considerably improved over time. Despite increasing trend of external debt in the recent years. The external debt to GDP ratio, signify in the extent of external debt vis-a-vis domestic output, declined and the Debt service to current receipt’s ratio that signifies capacity of the country to meet its debt service obligations improved.