(Current Affairs For SSC Exams) Economic Issues,Dec. 2012 - Indian External Debts

Economic Issues

December 2012

Topic : Indian external debts are within manageable limits

The Department of Economic Affairs (DEA) published its annual publication- India’s external debt: a status report 2011-12. As per the published report, India’s external debt in the end of March 2012 was $345.8 billion, which is 13% high than the previous year’s debt or $ 39.9 billion from where India stood at the end of March 2011. The publication points out about the upward movement of the stress that is put on the current account deficit (CAD) of the nation because of the risks thrown on it, from the external sectors that comprises Fall in the reserve cover for imports and external debt, depreciation in the exchange rate of rupee, rise in the level of external debts and the increased share of the short term commercial borrowing in the complete external debt quantum. The finance ministry cleared on 10 September 2012 that there can be a rise in the global economic risks that may rise with a weakened recovery and a slow growth scopes that may lead into high debts and seek growth finances even in the advanced economies. This clearance was based on Indian Vulnerability Index indicators, which has been experiencing the euro zone debt crisis and the global slowdown.

A detailed analysis of India’s position in external debt at the end of March, 2012 has been presented in the status report. It is also based on the data released by the Reserve Bank of India on 29 June 2012. The report not only presents the analysis of external debts trend and composition on the country but it also presents a comparative picture of this debt in reference to other developing nations of the world with respect to the fluid global economic situations. The best part of the report produced is that instead of all the facts presented and developments India’s debt is within manageable limits and can be indicated by the debt service ratio to 6 percent and external debt-to-GDP ratio of 20 percent in 2011-2012. Thus India continues to be within the less vulnerable countries when it comes to external debt indicators compared to that of the indebted countries. The Global Development Finance, 2012 from World Bank, India stood at the fifth position for absolute debt stocks when compared with the 20 other developing debtor countries. But when taken care of the ration of external debt to that of the gross national income, India was at the fifth position from the lowest side.

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