The debt stock stood at $ 93.91 billion at the end of March 1998 before increasing to $ 95.72 billion at the end of December 1998. The increase could be largely attributed to the success of Resurgent India Bonds floated in August 1998. There has been a significant decline in the external debt burden over the years, the report said.

Between March 1991 to end March 1998, the external debt in us dollar terms increased at an annual compound rate of 1.6 per cent and the growth rate in rupee terms was actually higher at 12.5 per cent because of depreciation of rupee against foreign currencies.

During the same period, gross domestic product (GDP) at the current market prices was estimated to have increased at an annual compound rate of 15.1 per cent. In December end 1998, debt as a proportion of GDP in 1998-99was estimated at 23 per cent.

Short-term debt, an important component of external debt which often poses problems in times of crisis, was at its lowest at 3.8 per cent at the end of December 1998. Short-term debt stood at $ 5046 million at the end of March 1998 and it slid to $ 3632 million in the next nine months ended December that year.

Long-term debt as at the end of March 1998, however, increased from $ 88.86 billion to $ 92.08 billion as at the end of December last year. Total external debt rose to $ 95.71 billion as at the end of December 1998 from $ 93.90 billion in March end 1998.

Short-term debt as a ratio to total external debt reached a peak level of 10.2 per cent in 1991 but declined to 3.9 per cent in 1994 only to steadily rise to 5.4 per cent in 1998 March end and declined again to the lowest level of 3.8 per cent in December 1998.

External debt as proportion to GDP reached a peak of 33.1 per cent in 1994 and declined steadily thereafter to reach 23.8 per cent in March end 1998. India'sshort-term debt, which is a crucial factor in overall debt management of the country has been low by international standards. The short-term component declined from 7.2 per cent of total debt at March end 1997 to 3.8 per cent at end December 1998.

The structural changes evident in composition of India's external debt continued in 1997-98. The share of debt on concessional terms declined from 45.3 per cent at end March 1995 to 39.3 per cent at end December 1998.

The share of official creditors reached a peak of the total debt at end of December 1998. The status report said the improvement in India's external indebtedness position in recent years was made possible through a conscious debt management policy that emphasises sustaining a high growth rate of exports, keeping the maturity structure as well as the total amount of commercial debt under manageable limits, prioritising the use of commercial credit and encouraging foreign investment.

The report expressed satisfaction that India emerged relativelyunscathed from the Asian crisis and global contagion. Gains already made have to be consolidated further, the report said adding short-term debt management had to continue as an area of high priority. There was a need for greater stress on debt sustainability exercises to consolidate the gains already made. This would include developing an external debt sustainability model with macro economic linkages and developing early warning indicators.

The report said developing a sovereign external debt management model was another area of priority. The objective was to minimise costs and risks. The benchmark currency, interest and maturity mix could be used as target configuration for borrowing and debt management decision, the report said adding the model has to be dynamic in the sense of its continuous review to take care of changing situations.