New Delhi: Often hailed as an emerging global power, India’s rise is underpinned by a complex web of loans, investments and international financial cooperation. The question is whether India is a heavy borrower or a responsible debt manager. Which countries and institutions lend the most to India, and how has the country simultaneously extended assistance to dozens of other nations?
The data behind these questions tells a nuanced story.
India’s Growing Foreign Debt
Add Zee News as a Preferred Source
Influenced by domestic needs and global economic conditions, India’s foreign debt has grown over time. By the end of March 2020, India’s total external debt reached around $558.5 billion. This includes commercial borrowing, Non-Resident Indian (NRI) deposits and loans from multilateral institutions.
Raising capital from global markets has been a core part of India’s economic strategy, helping finance infrastructure projects, industrial growth and developmental initiatives.
Who Lends The Most To India?
India’s foreign debt is not concentrated with a single country. A large portion comes from international markets, foreign banks and institutional investors.
Multilateral institutions such as the World Bank and the Asian Development Bank have also been key lenders. During crises like the COVID-19 pandemic, loans from these institutions were crucial in supporting MSMEs, strengthening healthcare systems and bolstering education. Such borrowing has been an important tool for crisis management.
The Role Of NRI Deposits, Commercial Loans
NRI deposits play a vital role in India’s external debt system. Capital deposited by Indians living abroad provides India with a stable and relatively safe source of funding.
Similarly, commercial borrowing allows Indian companies to raise capital from global markets at competitive rates, supporting production, exports and employment.
However, such loans carry risks, including interest rate fluctuations and currency exchange volatility.
Borrower And Lender – India’s Dual Role
Despite being a borrower, India is also a major contributor to global development. Today, the country provides economic assistance to more than 65 countries through lines of credit, grants, technical cooperation and humanitarian aid.
Its partnerships are especially strong with neighbouring countries and African nations, enhancing India’s soft power and establishing it as a responsible global partner.
Is Foreign Debt A Threat?
Economists argue that foreign debt is not inherently risky as long as it is used productively and repayment capacity is maintained. India’s debt-to-GDP ratio has stayed manageable. A strong foreign exchange reserve and a growing economy give India the ability to service its obligations. The real challenge lies in ensuring that borrowed funds continue to drive development and generate employment.
