New Delhi: India’s foreign exchange reserves are comfortable and external debt is low, according to the economic survey released by the government on Tuesday. The survey also said that India has a potential growth positive position as far as the external debt level is concerned.
The survey said India’s foreign exchange reserves stood at USD 532.7 billion by September-end of 2022, which included 8.8 months of imports. “The reserves increased to USD 562.7 billion covering 9.3 months of imports till December-end of 2022,” it said. According to the Economic Survey, the country’s foreign exchange reserves stood at US$ 577 billion during April-December 2020 while it was US$ 607 billion during April-December 2021 and US$ 563 billion during April-December 2022.
As of November-end of 2022, the Survey added India was the sixth largest foreign exchange reserves holder in the world according to data compiled by the IMF. “The import coverage of foreign currency reserves has declined since the pre-pandemic levels in most emerging market economies; however, that of India has increased from 95% in Q4 2019 to 96.5% in Q3 2022,” the Survey said. According to the document, India’s external debt, at USD 610.5 billion as of September-end 2022, grew by 1.3% (USD 7.6 billion) over USD 602.9 billion as of September-end of 2021. However, external debt as a ratio to gross domestic product (GDP) fell to 19.2% as of September-end of 2022 from 20.3% a year ago.
The Survey documents that the optimal threshold for India’s external debt is around 23-24 percent of GDP. “Thus, India has the potential growth positive space as far as the external debt level is concerned,” it added.
It said, “While testifying to the prudent management of India’s external debt, this contrasts with the external debt distress unfolding in many peer countries, post Covid.”
According to the Survey, the long-term debt was lower at USD 478.7 billion as of September-end of 2022 than USD 498.1 billion a year ago with the share of long-term debt falling to 78.4% from 82.8% during the same period. India’s foreign exchange reserves rose by a whopping USD 1.727 billion to USD 573.727 billion in the week ending on January 20, according to Reserve Bank of India data.
RBI’s Weekly Statistical Supplement Bulletin said that the reserves rose to a six-month high, rising for two consecutive weeks. During the week ended January 13, reserves increased by USD 10.417 billion to USD 572.0 billion, showed earlier data.
India’s foreign currency assets, the largest component of foreign exchange reserves, rose by USD 839 million to USD 506.358 billion, according to the latest RBI data.