India's External Debt Rises 6.6% to $326 bn, But Current Account Deficit Stable.

India's external debt has risen by 6.6% to $326.6 billion at the end of September 2011 from $306.40 billion at end-March 2011. The rise in external debt is largely attributed to increase in external commercial borrowings, export credits and short-term debt.

The government has expressed concern over the increase in external commercial borrowings of corporates. This because a depreciation of the rupee leads to higher debt service burden, and that could impact profitability and the balance sheets of India Inc.

Current account deficit:

Meanwhile, the July to September trade deficit has come out at a whopping $43 billion, more than double! The current account deficit (CAD) was $16.9 billion in Q2 of 2011-12. During H1 of 2011-12, there has been an increase in the absolute size of current account deficit to $32.7 billion, reflecting widening of trade deficit as well as moderation of growth in exports of services.

However, as a proportion of GDP, CAD at 3.6% was a shade lower than 3.7% in H1 of the preceding year.

Source : yourmoneysite.com