India’s short-term external debt has risen rapidly in the last seven to eight years. According to a ministry of finance document on India’s external debt published in March, total short-term debt was around $19 billion in 2005-06. The quick estimate for December 2012 is that it had gone up to almost $92 billion. That is nearly a five-fold increase in little more than six years. The ratio of short-term debt to foreign exchange reserves was 12.9% in 2005-06 and by December 2012, this ratio had shot up to 31.1%. Servicing this debt, in an environment of weak export growth is onerous for Indian corporations. Further, their debt to operating cash flows was 6.2 times at the end of March 2012. Any reading above six is a sign that corporations are heavily geared and need to reduce their debt. Read More