External Debt Video Lecture | Business Economics for CA Foundation

now let us talk about external deaths
what do we mean by the term deaths
that's me the borrowings that we do the
money that we borrow borrowing can be in
many ways it can be in the form of loans
that we take or it may be that somebody
helps us by giving us grants now when we
borrow from a foreign country it is
called as external tips let us talk
about this step external debt as I said
external debt or external assistance is
of two types grants and loans grants
other aids that are given to us or the
hell that is given to us by rich nations
by developed nations and which we do not
have to return they are like a gift to
us by them and loans are something which
are to be repaid so there are two types
of low external assistance that is given
flattest grants and loans ninety percent
of the loans that we assistance that we
get is in the forms of loan earlier the
majority of a system that we got was in
the form of grants in 1980s it has
happened that nearly 75 percent of the
system that we got was in the form of
grants and even in 1990s nearly 25% of
the system was in the form of grants but
slowly with India developing and
becoming self-sufficient our grants have
reduced and more and more of a system
that we get is in the forms of loans now
who gives us these loans international
bodies like IMF International Monetary
Fund word bang hai da International
Development Association u.s. big
country's big developed countries like
USA UK and Japan etc they provide us
with loans now earlier as I said too
much of loans were given with the nature
the loans that are also given they also
have a part of concessional
dead to it like a part of it is not to
be returned in the rest of it is to be
returned that also has come down
considerably earlier the loan that were
given nearly 25% of it was in the
concessional form and the rest were to
be repaid now that share has come down
to 10.5% in 2013 the loan that we got
nearly 10.5% in was in the form of a
conceptional concessional debt external
debt has reduced over the years we got
an external debt of twenty two lakhs
Koror in the year March 2013 as a
percentage of GDP India's external debt
was 23 percent in March 2013 now the
debt service ratio the debt service
ratio is the loan that you take and the
interest that you have to pay to the
total exports it is said if you foreign
earnings if your total export is less
than the your way of returning that loan
that that also reduces your viability or
your strength of returning that loan
that also comes down so our depth
service ratio is also high it is like a
total exports that we do are less and
the amount of money that we borrow from
outside is more so our debt service
ratio is high it is around 6% according
to international standards it is still
high though earlier it was way high it
was around 30% over the years since our
exports have increased it has come down
by but by international standard it is
still high it represents debt service
ratio represents a capacity of a country
to service it's earned if yo the kind of
export that you do test how you are
going to repay or serve your external
net external debt so since I exported
goods has become better it is it is 25
percent of GDP it is still better it is
improved but still
in comparison to international standard
it is still high in 2008 India had
become out of the 15 most indepted
country we were hit he stood a thin that
ran but though early Aviva also he was
still hurt and then we had come down to
eight but then again our since our depth
has increased we have become the third
most indepted country after China and
Brazil out of the top 15 countries
recent third as the most indepted
country after China and Brazil so with
this we come to the end of external debt