India’s External Debt during Post Reform Period

Most of the countries of the world, which embarked on the road of economic development, had to depend on foreign capital to some extent. In fact in the initial stage of development, when domestic resources are not sufficient enough to finance development plans, foreign aid or capital is of immense importance. If the foreign aid or help is not used efficiently and managed effectively, if the receiving country does not put serious efforts in developing the domestic resources for its development, if the country becomes more and more dependent on foreign aid and loans continuously, it may be great cause of concern for the country. It may find itself in debt trap and face the debt servicing difficulties. In fact the external debt of the developing countries has been on rapid rise in absolute terms, that’s why the external debt of developing countries became the most talked about international problem. This paper throws light on certain important aspects of external debt of India and suggests the measures to for an effective external debt management policy.