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110 Economic Survey 2021-22

India’s Improved Resilience
Since the taper episode of 2013, India’s salient external sector sustainability indicators improved (Table
B2.1). Illustratively, the conventional metric of import cover in terms of number of months of imports
is more than double since the episode of taper tantrum.

Table B2.1: External Vulnerability Indicators for India

(Per cent, unless otherwise indicated)

Indicator Global Financial Taper-Tantrum (FY H1: FY 2022
2014)
Crisis (FY 2009)
External Debt (US$ 224.5 446.2 593.1
Billion)

Foreign Exchange 252 304.2 633.6*
Reserves (US$ Billion)

External Debt to GDP 20.7 23.9 20.1
ratio

Short-term debt (RM) 38.8 39.7 43.2
to Total Debt

Concessional Debt to 18.7 10.4 8.6
Total Debt

Reserves to Total Debt 112.2 68.2 107.1

Reserves to Short-term 270.2 171.9 248.2
Debt (RM)
Reserves Cover of 9.8 7.8 14.6
Imports (in months)
Debt Service Ratio 4.4 5.9 4.7

Net IIP/ GDP ratio -5.8 -18.2 -11.3
Source: Based on data of RBI
Note: (i) *: Forex reserves as on 31st Dec, 2021
(ii) RM: Residual Maturity
Due to accretion of large foreign exchange reserves in recent months, vulnerability indicators relating to
reserves such as reserves to total external debt, reserves to short-term debt (residual maturity), reserve
cover of imports, etc., have shown marked improvement in H1: FY 2022, vis-à-vis FY 2014, the taper-
tantrum year. Another key vulnerability indicator i.e. net IIP to GDP ratio has declined to (-) 11.3 percent,
as against (-) 18.2 percent in the said period. The external debt to GDP ratio has also declined since the
said episode. Besides, India witnessed a current account surplus of 0.9 per cent Q1 of 2021-22 on top
of similar surplus in 2020-21 after a gap of 17 years. On the other hand, India experienced the highest
ever current account deficit of 4.8 per cent of GDP in 2012-13 on the back of an equally large deficit of
4.3 per cent during the previous year (2011-12).