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Trend of external assistance in India

  • The share of concessional debt i.e., grant portion in total debt, in 1980-81 was as high as 75%. By the end of 2012, it was about 13%
  • ƒIndia’s external debt has risen from 13,470 crores in March 1981 to 17,50,000 crores at end of March 2012
  • ƒIndia’s external debt was 11.7% at end of March 1991, it has increased to 20% march 2012
  • ƒThe ratio of gross debt service payments (principal + interest) to external current receipts is also known as debt service coverage ratio. Below is the chart showing the DSCR for India
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The debt service coverage ratio for India remains high by international standards. The export of goods as a percentage of GDP is around 16.5% (2011-12). As this ratio is relatively low, depicting India’s capacity to service external debt quite low and thus making India vulnerable to external shocks. Therefore, this demands for sustaining the growth in exports. In terms of classification of indebtedness among the top 15 debtor countries of the world, India improved its rank from 3rd debtor after Brazil and Mexico in 1991 to 9th in 2001 and further to 4th after China, Russian Federation, Brazil, now India was fourth most indebted country in 2011.
India’s export of goods as a percentage of GDP (2011-12) works out to be around 16.5%. This ratio which represents the potential capacity of the nation to service external debt, being relatively low, makes India vulnerable to external shocks. This indicates the need for sustaining the growth in exports and services.

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