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Contents
1. India s position in the world 2. External debt situation 3. Trends for debt sustainability ratios since 1990 4. Legal system and governance 5. Policies and capacity building 6. Lessons from Indian experience
UN-ESCAP Lecture-2 External Debt by Tarun Das 2
UN-ESCAP Lecture-2
Ratio of short term debt to (per cent) Total debt Foreign exch. 8.3 39.8 32.7 17.5 17.6 39.3 13.8 162.4 15.8 64.7 6.6 15.5 17.0 63.2 4.2 4.6 20.5 57.4 9.9 39.0
External Debt by Tarun Das
Debt service ratio (per cent) 63.8 7.3 11.8 37.9 38.5 20.9 26.0 18.1 25.1 22.1
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Low Income: PC-GNP less than $765 Middle Income : PC-GNP between $766 and $9385
Low Income: PC-GNP less than $765 Middle Income : PC-GNP between $766 and $9385
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V to V to In e te ness GN XGS an income ratio ratio Classification 0 ess/ o 8 o erate/ o 25 28 ess/ o 5 0 o erate/ i le 38 3 ess / o 7 252 Se ere/ o 35 Se ere/ i le
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External Debt Situation of India
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As per cent to GDP 4.3 3.7 1.3 1.5 1.3 1.0 1.0
As per cent to total external debt 13.1 12.5 7.3 7.1 6.2 5.8 5.5
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3
Trends of Debt Sustainability Indicators
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3.1 Significant reduction in External Debt Service Ratio (at end March)
40
35.3
35 30 25 20 15 10 5 0
27.5 25.4 25.9 26.2 23.0 19.5 18.8 17.1 16.2 13.7 6.1 16 16.2
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93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05
External Debt by Tarun Das 16
91 19
19
19
92
3.2 Significant reduction in External Debt to GDP ratio (at the end March)
45 40 35 30 25 20 15 10 5 0
38.7 37.5 33.8 30.8 28.7 27.0 24.6 24.3 23.6 22.1 22.6 21.1 20.2 17.8 17.4
97
91
95
99
01
19
19
19
19
19
20
20
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05
93
03
17
97
91
95
99
01
19
19
19
19
19
20
20
03
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05
93
18
97
91
95
99
01
19
19
19
19
19
20
20
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05
93
03
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3.5 Reduction in Short Term Debt to Total External Debt Ratio (end March)
2
10.2
0
8.3 7.0 5.4 3.9 4.3 7.2 6.1 5.4 4.4 4.0 4.4 3.6 2.8 4
2 0
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20 00 20 0 20 02 20 0 20 0 20 0
20
3.6 Reduction in Short Term Debt to Total Foreign Exch. Ratio (end March)
382
2 2 1 1
126 98 24 21 30 30 19
15
11
1 1 2 1 2
2 2 2
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0
in US $ billion
8 6
5.1 4.9 4.2 6.7 6.0 5.4 5.9 5.1 2.3 0.1 0.1 0.6 4.6
2 0
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Other Liabilities include provident funds, post office and small savings deposits, reserve funds etc.
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All expenditures and receipts are subject to audit and accounting principles, under Controller General of Accounts Controller of Aid Accounts and Audit Office for external debt.
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4. F BM
ules 2004
Reduction of revenue deficit by 0.5% of GDP or more every year. Reduction of gross fiscal deficit by 0.3% of GDP or more every year. No assumption of additional debt exceeding 9% of GDP for 2004-05 and progressive reduction of this limit by at least one percentage point of GDP in each subsequent year.
UN-ESCAP Lecture-2 External Debt by Tarun Das 31
4.9 F BM ules 2004 No guarantee in excess of 0.5% of GDP in any financial year. Four fiscal indicators to be projected for the medium term. These include revenue deficit, fiscal deficit, tax revenue and total debt as % of GDP. Greater transparency in the budgetary process, rules, accounting standards and policies having bearing on fiscal indicators. Quarterly review of the fiscal situation.
UN-ESCAP Lecture-2 External Debt by Tarun Das 32
4.10 F BM ules 2004 The rules mandate the Central Government to take appropriate collective action in the case of revenue and fiscal deficits exceeding 45% of the budget estimates, or total nondebt receipts falling short of 40% of the budget estimates at the end of half year of the financial year. The rules also prescribe the formats for the mandatory statements.
UN-ESCAP Lecture-2 External Debt by Tarun Das 33
2005- 2006- 200706 BE 07 Tar 08 Tar 2.7 2.0 1.1 4.3 10.6 68.6 3.8 11.1 68.2 3.1 12.6 67.3
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No tied loans since 2003. No external assistance from bilateral countries except from Japan, USA, EC and Russian Federation since 2003. Prepayment of more expensive debt. India prepaid $5.9 billion debt to World bank and ADB in 2002-2004. Bilateral loans amounting to $1.3 billion from Sweden, Netherlands, Austria, Australia, Canada, Spain, Denmark, Kuwait and Saudi Arabia were completely liquidated in 2002-04
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