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Contents
1. Indias position in the world 2. External debt situation 3. Trends for debt sustainability ratios since 1990 4. Legal system and governance 5. Policies and capacity building 6. Lessons from Indian experience
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Ratio of short term debt to (per cent) Total debt Foreign exch. 8.3 39.8 32.7 17.5 17.6 39.3 13.8 162.4 15.8 64.7 6.6 15.5 17.0 63.2 4.2 4.6 20.5 57.4 9.9 39.0
External Debt by Tarun Das
Debt service ratio (per cent) 63.8 7.3 11.8 37.9 38.5 20.9 26.0 18.1 25.1 22.1
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Moderately Indebted: Either 132% <PV/XGS< 220% or 48% <PV/GNP< 80% Less Indebted: Both PV/XGS< 132% and PV/GNP< 48%
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Low Income: PC-GNP less than $765 Middle Income : PC-GNP between $766 and $9385 Low Income: PC-GNP less than $765 Middle Income : PC-GNP between $766 and $9385
PV to PV to Indebtedness GNP XGS and income ratio ratio Classification 19 106 Less/ Low 41 189 Moderate/ Low 25 128 Less/ Low 51 110 Moderate/ Middle 38 131 Less / Low 74 252 Severe/ Low 35 41 Severe/ Middle
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External Debt Situation of India
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Multilateral
Bilateral Non-resident Indians Others Total
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32 17 23 100
External Debt by Tarun Das
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14 26 34 100
11
50
22 10
61
34 17
-- Private sector
-- Short-term Total UN-ESCAP Lecture-2
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5
External Debt by Tarun Das
4
6 100
12
100
13
As per cent to GDP 4.3 3.7 1.3 1.5 1.3 1.0 1.0
As per cent to total external debt 13.1 12.5 7.3 7.1 6.2 5.8 5.5
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Trends of Debt Sustainability Indicators
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3.1 Significant reduction in External Debt Service Ratio (at end March)
40 35 30 25 20 15 10 5 0
93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05
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6.1
19
19
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92
91
3.2 Significant reduction in External Debt to GDP ratio (at the end March)
45 40 35 30 25 20 15 10 5 0
19
38.7 37.5 33.8 28.7 30.8 27.0 24.6 24.3 23.6 22.1 22.6 21.1
20.2
17.8 17.4
97
91
01
99
95
93
20
19
20
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19
19
19
05
03
17
146
128 122
110
99 95
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33.5
97
91
01
99
95
93
20
19
20
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19
19
19
05
03
19
3.5 Reduction in Short Term Debt to Total External Debt Ratio (end March)
12 10 8 6 4 2 0
02 97 92 94 04 91 01 96 99 95 98 93 20 19 19 20 20 20 20 19 19 20 19 19 19 19 19 05
20
10.2 8.3 7.0 5.4 3.9 4.3 7.2 6.1 5.4 4.4 4.0 4.4 3.6 2.8 4
00
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3.6 Reduction in Short Term Debt to Total Foreign Exch. Ratio (end March)
450 400 350 300 250 200 150 100 50 0
19 19 19 92 91
126 98 24 21 30 30 19 15 11 382
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93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05
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12.5 11
8 6 4 2 0
0.1 0.1 0.6 4.2 5.1 4.9 6.0 5.4 2.3 5.1 5.9 6.7 4.6
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90 19 -91 91 19 -92 92 19 -93 93 19 -94 94 19 -95 95 19 -96 96 19 -97 97 19 -98 98 19 -99 99 20 -00 00 20 -01 01 20 -02 02 20 -03 03 20 -04 04 -0 5
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19
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Other Liabilities include provident funds, post office and small savings deposits, reserve funds etc.
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All expenditures and receipts are subject to audit and accounting principles, under Controller General of Accounts Controller of Aid Accounts and Audit Office for external debt.
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4.9 FRBM Rules 2004 No guarantee in excess of 0.5% of GDP in any financial year. Four fiscal indicators to be projected for the medium term. These include revenue deficit, fiscal deficit, tax revenue and total debt as % of GDP. Greater transparency in the budgetary process, rules, accounting standards and policies having bearing on fiscal indicators. Quarterly review of the fiscal situation.
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4.10 FRBM Rules 2004 The rules mandate the Central Government to take appropriate collective action in the case of revenue and fiscal deficits exceeding 45% of the budget estimates, or total nondebt receipts falling short of 40% of the budget estimates at the end of half year of the financial year. The rules also prescribe the formats for the mandatory statements.
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200405 RE 2.7
4.5 9.8 68.8
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No tied loans since 2003. No external assistance from bilateral countries except from Japan, USA, EC and Russian Federation since 2003. Prepayment of more expensive debt. India prepaid $5.9 billion debt to World bank and ADB in 2002-2004. Bilateral loans amounting to $1.3 billion from Sweden, Netherlands, Austria, Australia, Canada, Spain, Denmark, Kuwait and Saudi Arabia were completely liquidated in 2002-04
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Data by both Creditors and Debtors classification are available. Data by Currency, maturity and interest mix are also available. Data cross-classified by institutions and instruments are also available. Time lag for data update : 8 weeks - well below the SDDS benchmark of the IMF. Status Report on External Debt is presented to the Parliament every year. Also posted on the MOF homepage (www.nic.in/finmin/miscellaneous).
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World Bank provided an IDF Grant for strengthening external debt management of India. Achievement under IDF Grant : Computerization and common database platform on the basis of CS:DRMS. Debt-Data connectivity established between RBI, Office of CCAA&A and the EDMU in the MOF. Organized 3 international seminars & one workshop with active participation by the World Bank, RBI, Financial Institutes, Commercial banks, corporate bodies, investment banks. Published three Books on papers & proceedings.45 UN-ESCAP Lecture-2 External Debt by Tarun Das
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