Consider the following statements:
- Most of India’s external debt is owed by governmental entities.
- All of India’s external debt is denominated in US dollars.
Which of the statements given above is/are correct?
- 1 only
- 2 only
- Both 1 and 2
- Neither 1 nor 2
Explanation
Statement 1 is incorrect
- At the end of March 2019, India’s external debt stood at USD 543 billion, which witnessed an increase of 2.6% over its level at the end of March 2018, primarily on account of an increase in short-term debt, commercial borrowings and non-resident Indian (NRI) deposits. Commercial borrowings remained the largest component of external debt, followed by NRI deposits and short-term trade credit.
Image Source: ICRA
Statement 2 is incorrect
- As per data released by RBI, US dollar-denominated debt was the largest component of India’s external debt with a share of 50.5 per cent at end-March 2019 (not all), followed by the Indian rupee (35.7 per cent), Japanese yen (5.0 per cent), SDR (4.9 per cent) and euro (3.0 per cent).
