India’s Total External debt vs Government of India ‘s External Debt :
India’s total external debt is owned by the GOI, states as well as private entities.
while
GOI total debt is owned by centre exclusively.
If we compare the numbers as on March 2024:
Country’s total debt is around Rs 53 Trillion while GOI total External debt is around 5.74 Trillion Rs while as on Sep 2023 ,
The debtor sectors include :
- General government central bank,
- Deposit-taking corporations (except the central bank),
- Other sectors (including other financial corporations,
- Non-financial corporations, and
- Households and non-profit institutions serving households (NPISHs).
The Debt Service Coverage Ratio (DSCR) :
- DSCR measures a borrower's ability to pay off their debt obligations.
- It is calculated by dividing a borrower's net operating income by their total debt service.
- A high DSCR is when either the income is high or total debt service is low indicating the lower risk of defualt by the borrower on the payment of their loans.
- Low DSCR is when either the income is low or total debt service is high indicating the higher risk of the borrower to default on the payment of their loans suggests that the borrower may struggle to make their payments on time.
Debt service ratio (DSR):
- Ratio of its debt service payments (principal + interest) to its export earnings.
- Debt service is measured by proportion of gross debt service payments (principal + interest) to external current receipts (exports) indicating the extent of preventing the usage of FOREX reserves for the repayment purposes of principal and interest.
Debt service ratios may rise because of:
- Lower price of commodities which are main exports of a country. oil exports for Venezuala.
- Higher Borrowing
- A fall in exports
- Higher interest rates increasing cost of debt repayments
- Devaluation increasing cost of external repayments.
- DSCR is opposite of DSR.
