India's External Debt: How Much is Too Much?
By siliconindia   |   Monday, 28 November 2011, 17:22 IST   |    3 Comments
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debt ratio
Foreign exchange reserves are much lower than our external debts. India's external debt stands at $305.9 billion, or 17.3 percent of GDP, according to the Reserve Bank of India (RBI) data. That's almost as much as the foreign reserves India has today, which is $319 billion as of July 29. The external debt increasing more than the foreign exchange is alarming. "This is definitely alarming. What is worse the foreign exchange reserves are made up of volatile funds-external borrowings, non-resident Indian deposits, foreign institutional investments, but not by stable inflows on account of balance of trade surpluses or foreign direct investment. These reserves can go away at short notice. The debt has to be brought down by stimulating exports and making consumer imports more difficult or expensive. We must do more to attract FDI and to make FII funds stay invested for longer periods." Surendra says.

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