India’s external debt, as of March 2009, was US$229.9 billion (22.0 % of GDP), recording an increase of US$5.3 billion or 2.4 % over 2008 mainly due to the increase in trade credits. According to an international comparison of external debt of the twenty most indebted countries, India was the fifth most indebted country in 2007. By way of composition of external debt, the share of commercial borrowings was the highest at 27.3% in March 2009, followed by short-term debt (21.5%), NRI deposits (18.1%t) and multilateral debt (17.%).
The debt service ratio has declined steadily over the years, standing at 4.6% in March 2009. By not taking into account the effects of the appreciation of the US dollar against other major currencies and the Indian rupee, the stock of external debt would have increased by US$18.7 billion, as compared to the stock in March 2008. The share of short-term debt in the total debt increased to 21.5% in March 2009, from 20.9% in March 2008, primarily on account of a rise in short-term trade credits.