Exchange Rate Policy and the Burden of External Debt

The recent controversy regarding the quantum of India's external debt has highlighted the accelerating pace at which it is growing during 1980s. Even with officially accepted definition, India's external debt/GNP ratio has increased from 12.3% in 1980-81 to 18.9% in 1987-88. The order of increase in external debt and the present level of Debt Service Ratio (24% of current receipts) would indicate that India's external debt is rising rapidly and the risks associated with high and increasing external debt could increase further.