India External Debt

India's external debt, as at the end-March 2020 was US$ 558.5 billion. Currently, the worlds' most indebted country is the United States (U.S.A.), followed by the United Kingdom.

Is this the money India owes to external agencies like the World Bank and the International Monetary Fund (IMF)?

So first define debt based on their maturities:-

Long term - loan with a maturity period of more than one year.

Short Term - debt has a maturity period of less than one year.

                       But, Short term external debt also includes interest payment of long term debt.

As its complex to understand why and how we take this burden of loan or its only bore by the government of India.

Let's understand some of its components -

 

Multilateral Credit - borrowed by GOI from global institutions like the Internation Monetary Fund   

                                    and the World Bank.

Bilateral Credit - borrowed by GOI from the other countries ( Like Japan and Germany )

                              i.e. - Japan is the single largest lender to India,

External Commercial Borrowings (ECBs) - borrowings made by Indian Company outside India

Deposits of Non-Resident Indians(NRIs) - treated as a liability as they are to be repaid to depositors

Foreign Institutional Investment (FII) - investment by foreign fund houses ( like mutual funds) in the

                                                                    Indian stock market and government securities.

No, not all the money has been borrowed by GOI but just part of it. Government debt is also called 'Sovereign' debt. The share of government 's debt in total external debt is just about 20% remaining is non-Government debt.

India perspective with the rest of the world:-

India compares quite favorably with the rest of the world in external debt. According to Worlds Bank annual publication title ' International Debt Statistics 2020' Indicates that "India continue to be among the less vulnerable nations and its main external debt indicators compare well with other indebted developing countries"

The current scenario indicates that our external debt is within manageable limits and India is not a vulnerable major or minor arising on the external debt front.

As of now, coronavirus has created a lot of destruction over developing economies which are expected to shoot up the borrowing to control the situation and it meant that GOI will not surpass limits, beyond which country has to pay.

Important Links - https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=50021

                             https://data.worldbank.org/products/ids