(RTTNews) - According to data published by Department of Economic Affairs, Ministry of Finance, India’s external as at the end of March 2008 amounted to $221.2 billion or Rs.884,516 crores, reflecting an increase of 30.4% over the previous year. The escalation in external debt during the year could be ascribed mainly to increase in external commercial borrowings, short-term debt and depreciation of dollar. However, in terms of rupees, the increased in India’s external debt during 2007-08 was lower at 19.6% due to the appreciation Indian rupee against the US dollar.

Corporate overseas borrowings rose by 39.5% and short-term borrowings increased by 34.8%, an official release said.

However, the Government’s debt as a proportion of total external debt declined from 28.4% to 25.6% and as a percentage of GDP, it dropped to 4.8% from 5.3%. Also, the weakening of dollar vis-�-vis other major international currencies accounted for around 20% of the total increase in external debt.

The release further said that external debt was in the comfort zone with the foreign exchange cover of the debt being at 140% during 2007-08, up from 117.4% in 2006-07.

Debt service ratio, which indicates the ability to repay loans remained low at 5.4% during 2007-08, though this was marginally higher by 0.6 percentage points over the previous year.

Other indicators like ratio of external debt to Gross Domestic Product, which indicates the indebtedness of a country, was 18.8% during 2007-08 and the ratio of short-term debt to foreign exchange reserves stood at 14.3%. The ratio of short-term debt to total external debt was 20% in the end of March this year.

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