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ICICI Securities Report
India is stable from a macroeconomic standpoint because it has taken on very little external leverage over the past eight years. India's external debt was up just 39.1% in March 2022 compared to its level in March 2014.
In the previous 10 years (March-2004-March-2014), India's external debt had increased by 296%, leaving the economy much more vulnerable to the ‘Taper Tantrums' of those times. And there had been one even faster decade of increase in external debt — a 363% increase between March 1980 and March 1990, which inevitably resulted in a balance of payments crisis in 1991.
The external debt/gross domestic product ratio (a measure of a country's capacity to carry external debt) moderated to just 19.5% in March-22—far below the 35% threshold level of worry for a country that can access global capital markets (like India since 1992).
The closest India came to the risk threshold was in 1994 (33%); the recent peak of 24% reached in March 2014 was still well below the risky threshold.
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