Changing trends

New Delhi, Sept 17: The government today said foreign debt had shot up by 22.6 per cent to $155 billion in 2006-07.

About 10 per cent of the increase in the debt was because of the weakening dollar vis-à-vis other global currencies.

In rupees, the foreign debt stood at Rs 6,75,857 crore, accounting for 16.4 per cent of the gross domestic product (GDP).

The Reserve Bank of India (RBI) had earlier said that the debt-GDP ratio had increased by 0.6 per cent to 15.8 per cent in the last fiscal.

It said 49 per cent of the debt was denominated in dollars, 12.9 per cent in yen, 17.4 per cent in rupees and 2.6 per cent in pounds.

Commercial borrowings made up 56 per cent of the increased debt, followed by NRI deposits (16 per cent), short-term debt (12 per cent) and multilateral debt (11 per cent).

Sovereign debt at the end of last fiscal was $48.6 billion, accounting for around 31.4 per cent of the debt and 5.3 per of GDP. The debt service ratio fell to 4.8 per cent from 9.9 per cent.

According to the Global Development Finance 2007 report, which has data for 2005, the ratio of external debt to gross national income was the second lowest for India after China.

The report said concessional loans in India’s debt portfolio was the highest amongst the top 10 indebted developing countries.

According to the World Bank report, the ratio of short-term debt to foreign exchange reserves was the lowest for the country, and the share of short-term debt in total debt was the second lowest.

The World Bank said addition to debt between 1990 and 2005 was the lowest for the country.

The rise in foreign debt comes at a time of a fall in industry growth rates. The growth in the index of industrial production slowed sharply to 7.1 per cent in July from 13.2 per cent a year ago.

Economists attributed this to the Reserve Bank’s tough monetary measures that pushed up interest rates.

As a result, there was a brake on consumer purchases and investments.

Notwithstanding weak industry show, the gross domestic product is expected to grow by 9 per cent this fiscal on the back of a good monsoon and a booming services sector.