What was the proportion of external debt in the Gross Domestic Product (GDP) at the end of September 2023?
- (a)18.6%
- (b)26.3%
- (c)15.8%
- (d)30.1%
Correct — A, 18.6%. India's external debt (amounts owed by the government and private entities to non-resident/foreign lenders) is tracked each quarter by the Department of Economic Affairs and the RBI relative to GDP as a measure of external vulnerability. At the end of September 2023, this ratio was reported at 18.6% — quarterly figures of this kind are provisional and can be revised slightly in later reports, but 18.6% is the figure MPPSC's key accepted for this quarter.
- (b)26.3% — Well above India's actual external-debt-to-GDP ratio for that quarter, which stayed in the high-teens range through 2023.
- (c)15.8% — Below the actual reported ratio for the period.
- (d)30.1% — Far above India's actual external-debt-to-GDP ratio, which has remained comfortably in the high-teens percentage range through the 2020s.
External debt is the total amount India's government and private entities (companies, banks) owe to non-resident (foreign) lenders, in both foreign-currency and rupee terms. Comparing it to GDP — the external-debt-to-GDP ratio — is a standard indicator of a country's external vulnerability: how large its foreign obligations are relative to the size of its economy.
The ratio is published quarterly and watched alongside other external-sector indicators (forex reserves, current account deficit) to judge whether a country risks balance-of-payments stress. A ratio that stays broadly stable or falls, as India's has in recent years, signals manageable external exposure.
- External debt = money owed by the Indian government and private entities to non-resident lenders.
- The external-debt-to-GDP ratio is tracked quarterly by the Department of Economic Affairs (Ministry of Finance) jointly with the RBI.
- It is one of several standard indicators — alongside forex reserves and the current account deficit — used to judge a country's external-sector vulnerability.
- A large share of India's external debt is owed by non-government (private) entities rather than by the Government of India itself.
The external-debt-to-GDP ratio (18.6% at end-September 2023) captures BOTH shares combined.
- Confusing external debt (owed to foreign lenders) with total public debt (which includes domestic government borrowing)
- Assuming most of India's external debt is government debt — a larger share is actually private/non-government
MPPSC/UPSC test the latest reported external-debt-to-GDP figure or the debt's composition (government vs private, currency mix) — this is 'current affairs meets economy,' so the exact number changes each year/quarter.
Consider the following statements: 1. Most of India's external debt is owed by governmental entities. 2. All of India's external debt is denominated in US dollars. Which of the statements given above is/are correct?
- (a) 1 only
- (b) 2 only
- (c) Both 1 and 2
- (d) Neither 1 nor 2
Answer(d) Neither 1 nor 2
Same concept — the composition of India's external debt (government vs private share, currency denomination) — that underlies the debt-to-GDP figure tested here.
- practice — not a real PYQ
India's quarterly external debt data is compiled and released jointly by the RBI and which government body?
- (a)Department of Economic Affairs, Ministry of Finance
- (b)Ministry of Commerce and Industry
- (c)NITI Aayog
- (d)Ministry of External Affairs
Answer(a) Department of Economic Affairs, Ministry of Finance — jointly with the RBI.
- practice — not a real PYQ
Which of the following is used as an indicator of a country's external-sector vulnerability?
- (a)Fiscal deficit
- (b)External-debt-to-GDP ratio
- (c)Direct tax-to-GDP ratio
- (d)Repo rate
Answer(b) External-debt-to-GDP ratio — along with forex reserves and the current account deficit, it gauges exposure to foreign creditors.