India’s external debt increased by $31 billion in 2023, reaching a total of $646.79 billion, according to the World Bank’s International Debt Statistics (IDS) report. This growth highlights the country’s rising reliance on external borrowing.
Key Highlights
- Increase in Interest Payments
- Interest payments on external debt rose by nearly 50%, from $15.08 billion in 2022 to $22.54 billion in 2023.
- Long-Term vs. Short-Term Debt
- Long-term debt (borrowed for over a year): Increased by 7% to $498 billion, indicating a preference for stable borrowing.
- Short-term debt: Declined slightly to $126.32 billion, reflecting reduced reliance on quick-repayment loans.
- Debt-Export Ratio
- External debt equaled 80% of India’s total exports in 2023.
- Debt servicing (repayment of principal and interest) accounted for 10% of exports.
- Net Inflows Reflect Investor Confidence
- India received $33.42 billion in net debt inflows in 2023.
- Equity inflows, reflecting foreign investment in Indian markets, were strong at $46.94 billion, showing continued confidence in India’s economy.
India’s rising external debt highlights growing financial needs but also showcases strong investor confidence, as evidenced by significant equity inflows. The focus on long-term debt points to a strategy for more sustainable borrowing.
