India’s External Debt Interest Surges 93%

Chennai: Interest payments on India’s public and publicly guaranteed external debt in 2023 rose by 93 per cent, while total interest payment on external debt went up by 49 per cent.

The South Asia region saw the biggest yearly increase in interest payments on PPG debt in 2023, rising 62 percent to US$12.5 billion. The increase was most noticeable in Bangladesh and India, whose interest payments increased by more than 90 percent in 2023, finds the World Bank.

While the interest payment on external debt increased 49 per cent from $15.08 billion in 2022 to $22.54 billion, that on public and publicly guaranteed debt went up from $3.2 billion to $6.2 billion – up 93 per cent. Interest payment on non-guaranteed private sector external debt went up from $11.8 billion to $16.2 billion.

Compared to a decade ago, the South Asia and Sub-Saharan Africa regions had the steepest increase in interest payments. Interest payments increased fourfold and threefold, respectively, in the 2013–23 period, a much faster pace than Gross National Income and export revenue growth.

Of the total external debt of $646 billion, public and publicly guaranteed debt accounted for $214 billion. Private debt accounted for 51 per cent, bilateral debt 16 per cent and multilateral debt 33 per cent. Japan is the largest provider of bilateral debt. As far as multilateral debt is concerned, World Bank-IBRD accounted for 11 per cent, ADB 11 per cent and other multilateral agencies 11 per cent.

While the long-term debt stocks rose 7 per cent to $498 billion in 2023, short-term debt stocks declined marginally to $126.32 billion.

Among low and middle-income borrowers, India was the top recipient of portfolio equity flows in 2023 with inflows of $21.4 billion, up from an outflow of $16.6 billion registered in 2022. In terms of volume, India was the top recipient of personal remittances among LMIC countries in 2023 with $119.5 billion.