Valuation loss due to the depreciation of the US dollar vis-à-vis major currencies such as euro, yen and SDR amounted to $ 0.7 billion. Excluding the valuation effect, the decrease in external debt would have been$ 4.5 billion instead of US$ 3.9 billion at end-June 2020 over end-March 2020.
” COVID-19 related volatility in global financial markets resulted in sharp capital outflows in debt and equity markets in Q2 20( April-June’20)” said Rahul Bajoria, chief India economist at Barclays in a report.
Commercial borrowings remained the largest component of external debt, with a share of 38.1 per cent, followed by non-resident deposits (23.9 per cent) and short-term trade credit (18.2 per cent).
Short-term debt on residual maturity basis which is debt obligations that include long-term debt by original maturity falling due over the next twelve months and short-term debt by original maturity constituted 44.0 per cent of total external debt at end-June 2020 (42.4 per cent at end-March 2020) and stood at 48.2 per cent of foreign exchange reserves (49.6 per cent at end-March 2020).
US dollar denominated debt remained the largest component of India’s external debt, with a share of 53.9 per cent at end-June 2020, followed by the Indian rupee (31.6 per cent), yen (5.7 per cent), SDR (4.5 per cent) and the euro (3.5 per cent).