India's external debt stands at $305 bn. It’s worth going a little deeper into how this is split up and the interesting role that non resident Indians play here. Of total external debt, the long term debt was at $240.9 billion while short-term debt stood at US$ 65.0 billion at end-March 2011. NRI Deposits are classified as long term debt as all of it is with a maturity of one year and longer. NRI Deposits continue to rise though they’ve come down in proportion to total external debt. So the trust factor is steady if not strong. The 'implicit’ interest rate on NRI deposits is around 3.6%. The majority of the deposits are Non Resident (External) while, Foreign Currency Non Resident (Bank Deposits) come in second and Non Resident Ordinary (NRO) are the smallest segment. For instance for 2011, of a total of $51 billion of NRI Deposits, $26 billion are NR (E), $15 billion are FCNR (B) and $9 billion are NRO.

If you are looking at the external debt figure, it might be useful to note is that India’s foreign exchange reserves ($316 billion) provide good cover. The ratio of foreign exchange reserves to total external debt has risen from 7 per cent in 1990-91 (external debt that year was only at $83 billion which goes to show you can be more indebted but less broke!) to as high as 138 per cent at end-March 2008. At end-March 2011, foreign exchange reserves provided almost 100 per cent cover to the India’s external debt. Incidentally, while NRI deposits as a percentage of external debt are going down, commercial borrowings are going up. The Government attributes this to a dynamic economy.

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