India’s Total External Debt Touched $243 Billion

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India’s total external debt rose by 8.1% to $242.8 billion at the end of September 2009 from $224.6 billion at March-end 2009.

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The long term debt increased by 10.6% to $200.4 billion, while short term debt declined by 2.3% to $42.4 billion.

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Most of the increase in the debt ($8.3 billion or 45.6%) is due to depreciation of dollar against major global currencies, out of total increase of $18.2 billion, according to a finance ministry statement.

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The total external financial assets increased by $21 billion to $378.6 billion at September end 2009 over the previous quarter.

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Total external financial liabilities increased significantly by $32.7 billion over the previous quarter and stood at $476.4 billion at Septemberend 2009.

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Direct investment and Portfolio investment in India increased by $11 billion and $10.2 billion respectively over the previous quarter.

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Long-term debt at $ 220.4 billion accounted for 82.5% of the total debt.

As a positive development, India’s short term debt, which had increased sharply between March 2005 and March 2008, went down by $985 million to $42.4 billion at September-end.

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The decline was seen in all the components of short-term debt except trade related credits for period above six months and up to one year

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Short-term credit, that is a credit of less than 180 days, short-term liabilities of banking system and investment of foreign central banks and other global financial institutions in government’s treasury bills is considered bad for economy.

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India Crossed the $100 Billion Mark in FDI :)

Amidst of the global crisis, India crossed the $100 billion milestone in foreign direct investment (FDI)

Amidst of the global crisis, India crossed the $100 billion milestone in foreign direct investment (FDI) through equity confirming its rising profile as a safe and sound investment objective.

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However, 44% of the money came through Mauritius as investors wanted to take advantage of India’s double taxation avoidance treaty with the island nation.

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Moreover, the cumulative FDI inflows since 2000 and up to July 2009 amounted to $100.33 billion while the inflows in the first 4 months of the current fiscal were $10.49 billion and the other big investors included Singapore, the US, UK and the Netherlands.

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Additionally, it is said that FDI’s main impact comes from new technology, new managerial capabilities and new benchmarks in corporate functioning whereas India reached the $100 billion mark at a time when the global financial crisis has had a dampening impact on FDI flows which are expected to fall this year.

Further, it is said that the global FDI flows will decline by 30% in 2009 reviving only marginally during the next year.

Although declining, FDI flows to developing countries proved to be more flexible than other capital flows such as portfolio investment and bank lending, the main reasons being that FDI is more of a long term nature than capital flows.

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On the other hand, India’s services sector received 23% of the cumulative equity FDI inflows followed by computer software, hardware, telecommunication and real estate.

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