The external debt of India has increased to 30.4 percent in the year ended March 31, 2008. It has touched the $221.21 billion mark in 2007-08. The high growth in the external debt is witnessed due to loans taken by various corporate houses of the country. However, the amount of external loans taken by the Indian government has declined. The external borrowing has declined by 25.6%.

The short term debts have increased to 34.8%. Debts are surged due to increase in oil import. The appreciation of rupee and depreciation of dollar also helped to increase the external debts. ECB’s have touched the mark of $62.02 billion as on March 31, 2008 by showing a growth of 49%.

The corporate houses are borrowing from the international market due to difference in the national and international interest rate. The Reserve bank is increasing interest rates to tame the inflation in India. The debt service ratio of India is at second place after China as per the report of the World Bank. The finance ministry is satisfied over the other indicators of economic growth which are still in comfortable zone.