India has scope to attract $90 billion in debt flows: RBI
India’s debt market opened with caution and adjusted for foreign capital.
According to a study by the Reserve Bank of India, given the country’s external debt threshold, India has the scope to attract debt inflows worth US$90 billion (approximately Rs.693,000 crore).
“Empirical findings show that compared to India’s current external debt-to-GDP ratio of 20 percent. The calculated threshold is between 23 and 24 percent of GDP higher, indicating scope for attracting further debt flows in the $90 billion regions. According to the RBI, the study “Growth, Maximizing India’s External Debt. Given the risk of increased external vulnerabilities due to exposure to higher external debt. The calculate margin can be used carefully to balance growth also macro stability objectives, the report said.
India’s debt market opened with caution and adjusted for foreign capital. India’s external debt is estimate at $614.9 billion by December 2022. Trade credits (CB) of $226.4 billion, NRI deposits of $141.9 billion. And short-term trade credits of $110.5 billion together make up about 78 percent of the total foreign debt.
The external debt-to-GDP ratio is 20.0 percent at the end of December 2021.
Total external debt, which fell below pre-crisis levels immediately after the pandemic. Shifted to pre-crisis levels in late December 2020 also continued to consolidate, supported by NRI deposits. Which surpassed pre-crisis levels in late In June 2020, trade credits exceeded levels pre-pandemic to Late September 2021. As a result, short-term trade credits will exceed pre-pandemic levels by late December 2021, RBI reported.
In contrast, India’s external debt remains relatively immune to the global financial crisis (GFC). Reflecting the sustainability of trade credit, the most sensitive to growth and the most significant component of India’s external debt. “The resilience of trade credit following the global financial crisis was largely due to the relatively muted impact of the global financial crisis on growth, in stark contrast to that seen during the GLD,” the study said.
