India's External Debt Climbs Significantly

India's external debt has seen a notable increase, reaching USD 717.9 billion by the end of December 2024, up from USD 648.7 billion in December 2023. This marks a 10.7% rise, with a slight quarter-on-quarter increase of 0.7% from USD 712.7 billion at the end of September 2024.

Understanding the Debt Composition

The largest portion of India’s external debt is US dollar-denominated, accounting for 54.8% of the total. Other significant components include Indian Rupees (30.6%), Japanese Yen (6.1%), SDR (4.7%), and Euro (3%). The non-government sector, especially non-financial corporations, holds a substantial share of the debt.

Debt Servicing and Valuation Effects

A significant part of the debt increase is due to the appreciation of the US dollar against other currencies, adding USD 12.7 billion in the last quarter of 2024. Loans remain the largest component of the debt, with the debt servicing ratio slightly improving to 6.6% of current receipts by December 2024.