The finance minister seems to be more concerned about fiscal deficit. No mention is being made about external debt.
India’s overall debt at US $99 billion does not seem to be a problem area as far as the Finance Minister is concerned. He has rightly mentioned the figure in passing and all concentrated efforts seem to be on controlling the internal debt trap which is soon going out of control with fiscal deficit as the prime focus.

One of the positive aspects of Indian economic management is that external debt to GDP ratio has declined from 30.4 per cent in 1991 to 23 per cent by 1999. Also, the proportion of short-term debt in total debt has declined from 10.3 per cent in 1990-91 to 4.7 per cent by 1999. On the other hand, fiscal deficit situation has not improved significantly. Fiscal deficit has declined from the high level of 8.33 per cent of GDP in 1990-91 to 5.69 per cent by 1992-93, but failed to go down since then. It is projected at 5.6 per cent the year 2000-01. This is the reason for greater concern over fiscal deficit.

The finance minister has put the external debt figure at US $99 billion. How will the government cope with this payment?
India has improved its overall macro performance and that is why such a high figure of external debt is not worrisome. India has been consistently maintaining a high GDP growth of around seven per cent on an average per year. If it is maintained in the future as well, it will make external debt management an easier task. Exports, after experiencing a fall in the past two years, have recorded a high of around 13 per cent last year, which will ease India’s debt servicing task. Coping with the current level of external debt should not be difficult. The ratio of debt service to receipts has declined from 35.3 per cent in 1990-91 to 18.2 per cent in 1999-00, while the ratio of interest payments to current receipts has declined from 15.5 per cent in 1991 to 7.1 per cent in 1999-00. Our exports have been averaging at an annual growth rate of 10.5 per cent since 1992-93, while the external debt has increased by an annual average of 1.95 per cent since 1992-93. Non-debt creating capital inflows have also gone up. So,repaying current level of external debt should not be a problem.

Most of the debt is dollar-denominated. With the Rupee depreciating, how will the government tackle the situation?
Since external debt is serviced by foreign exchange earnings, exchange rate depreciation does not cause problem especially as export earnings and non-debt creating capital inflows remains strong. India has had a stable Rupee in the past and even with a comfortable forex reserve level of US $40 billion and currency reserve at US $25 billion should make debt repayment an easy task.

The government has committed that it will pay off a major part of the debt in the coming years. How will they source the required funds?
India has never failed in repaying its external creditors. Repayments take place as per schedule. India's external debt management has never been very good. With buoyancy in export earnings, with foreign exchange earnings flowing in from software and non-debt creating FDI and FII sources and with the economy growing at an average of 6-7 per cent, we should not have any difficulty in repaying our debts on schedule.

Where is a major part of our debt flowing into? Is it contributing to growth?
Sectors such as power, telecom and ports are getting ECB inflows. Such investments have a strong impact on economic growth through forward linkages.