India's external debt rose by $31 billion to $646.79 billion in 2023, as per the World Bank International Debt Report.
Interest payments also increased from $15.08 billion in 2022 to $22.54 billion the year after. The share of long-term debt rose by 7% to $498 billion, while short-term debt saw a slight decline to $126.32 billion.
According to the report, external debt stock as percentage of exports was 80%, while debt servicing was 10% of exports in 2023.
The World Bank International Debt Report, 2024, further said that net debt inflows during the year worked out to be $33.42 billion, while the net equity inflows was higher at $46.94 billion in 2023.
To be sure, India has built up sufficient foreign exchange reserves over the last few years that provide a cushion against macro shocks. The Reserve Bank holds over $640 billion in its kitty.
In September, the World Bank projected India's GDP growth to remain strong at 7% in fiscal 2025. This is despite a subdued external environment, and the dissipation of post-pandemic rebound effects. External risks to the outlook are significant, the global lender stated in its bi-annual India Development Update.
In particular, geopolitical tensions could put pressure on commodity prices and critical supply chains, and resurgent inflation could still keep global interest rates “higher for longer”, it said.
(With PTI inputs)
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