In response to a query in the Lok Sabha on Monday, Union Finance Minister Nirmala Sitharaman said that at the current exchange rate, the foreign debt is estimated to be Rs 7.03 lakh crore which equates to about 2.6 per cent of India’s GDP.
The total debt of the central government is considered to be around Rs 155.8 lakh crore or 57.3 per cent of GDP. The figure was calculated as of 31 March 2023.
According to Sitharaman, the central government’s foreign debt accounts for approximately 4.5 per cent of total debt and less than 3 per cent of GDP. “The external debt is mostly financed by multilateral and bilateral organizations at concessional rates. As a result, the risk profile stands out as safe and prudent,” she explained.
“The Reserve Bank of India recently announced various measures to diversify and expand the sources of forex funding to mitigate exchange rate volatility and global spillovers,” Sitharaman explained.
“Incremental foreign currency non-resident (Bank) and non-resident (external) Rupee deposit liabilities were exempted from the maintenance of Cash Reserve Ratio (CRR) and statutory liquidity ratio (SLR) for deposits mobilized up to 4 November 2022,” she added.
“Fresh FCNR(B) and NRE deposits were exempted from the extant regulation on interest rates, i.e. interest rates shall not be higher than those provided by the banks on similar domestic rupee term deposits, till 31 October 2022. The regulatory framework governing foreign portfolio investments in debt flows has been revised in order to encourage foreign investment in Indian debt instruments,” she said.
The external commercial borrowing limit (via the automatic route) has been raised to USD 1.5 billion and the all-in-cost ceiling has been raised by 100 basis points in select cases through 31 December 2022,” Sitharaman responded.
“To promote the growth of Indian exports and to support the growing interest of the global trading community in the Indian Rupee, the RBI has put in place an additional arrangement for invoicing, payment, and settlement of exports/imports in INR on 11 July 2022,” Sitharaman explained.