India's External Debt Rises to $613.1 Billion as of End December

India's external debt, which refers to the amount borrowed by the government, companies, and individuals from foreign sources, rose 1.2% to $613.1 billion as of the end of December 2022, according to data released by the government. This marks a significant increase from the external debt figure of $608 billion at the end of September 2022.

The government attributed the rise in external debt to an increase in long-term borrowings, which increased by 1.6% to $448.7 billion. In contrast, short-term debt fell by 0.5% to $27.5 billion, reflecting a trend towards more sustainable borrowing.

The country's debt service ratio (DSR), which refers to the percentage of debt repayment to the country's foreign exchange earnings, improved to 5.2% from 5.5% in September 2022. This suggests that India's ability to service its external debt has improved in the last quarter.

India's current account deficit, which is the difference between the country's imports and exports, also improved in the October-December quarter, falling to $18.2 billion from $26.8 billion in the previous quarter. This was largely due to a rise in exports, particularly of goods such as textiles, gems and jewelry, and engineering goods.

Despite the improvement in the current account deficit, the rising external debt remains a cause for concern, as it increases the country's vulnerability to external shocks and currency fluctuations. The government will need to carefully manage its borrowing and repayment obligations to ensure that the country's external debt remains sustainable.

The rise in external debt also underscores the need for India to focus on improving its export competitiveness, diversifying its export basket, and attracting foreign investment to support sustainable economic growth. The government has recently taken steps to boost exports, such as by launching the 'Make in India' campaign, improving infrastructure, and simplifying regulatory processes, but more needs to be done to achieve sustainable growth.

In conclusion, while the improvement in the current account deficit is a positive development, the rise in India's external debt highlights the need for greater focus on sustainable borrowing and export growth to support long-term economic growth.