Whistling in the Dark

GOING by the trends in external debt, the country's balance of payments position has the appearance of being relatively comfortable. According to the government's recent While Paper, the debt-GDP ratio has come down from 41.1 per cent in 1989-90 to 34.2 percent in 1994-95, the share of short- term debt in the total has fallen from 10.2 per cent in March 1991 to 4.3 per cent at the end of the last financial year and the debt-service ratio has fallen from 30.9 per cent to 26.7 per cent over the same period. Further, though the stock of external debt increased by about $ 6.4 billion between March 1994 and March 1995, actual debt creating inflows in 1994-95 were only $ 787 million. The rest of the $ 5.6 billion increase in debt during this period was due to the depreciation of the dollar against the other currencies in which part of India's external debt is denominated. It is not surprising that in its White Paper the government has chosen to focus on these aspects, suggesting thereby that while the balance of payments crisis of 1990-91 was explained by India's external indebtedness becoming unsusfainably high, leading to loss of investor confidence and consequent haemorrhaging of reserves, the adjustment programme since then has been quite successful, even if not fully adequate yet.