India’s total debt has become a key economic indicator, reflecting how effectively the nation handles its financial responsibilities. As of early 2025, the country’s total debt is estimated at around ₹181.68 trillion (approximately $2.091 trillion), which includes both internal and external borrowings. This discussion highlights the structure of India’s debt, past trends, and its economic impact.
What is the Total Debt of India?
The total debt of India represents the overall liabilities owed by the government to creditors, both domestic (internal) and foreign (external). It is a crucial measure of the government’s borrowing capacity and fiscal discipline.
By March 2024, India’s total debt stood at ₹168.72 trillion, with projections showing a rise to ₹181.68 trillion by March 2025. The continuous borrowing supports development projects and manages fiscal deficits, leading to higher debt levels.
Components of India’s Total Debt
India’s total debt is divided into two main categories:
- Internal Debt: Borrowings raised within the country through instruments such as government bonds, securities, and treasury bills. As of March 2025, internal debt was approximately ₹166.57 lakh crore.
- External Debt: Liabilities owed to foreign lenders, which amounted to ₹53.7 lakh crore in March 2024 and are expected to reach ₹57.4 lakh crore by March 2025.
These categories shed light on India’s financing strategies, budgetary needs, and infrastructure funding.
Internal Debt Over the Years
India’s internal debt has shown a steady upward trend:
- 2019-2020: ₹83.19 lakh crore
- 2020-2021: ₹102.98 lakh crore
- 2021-2022: ₹119.01 lakh crore
- 2022-2023: ₹135.66 lakh crore
- 2023-2024: ₹151.99 lakh crore
The consistent growth in internal debt highlights government efforts to accelerate economic development and enhance social welfare.
External Debt by Year
India’s external debt has gone through notable changes over recent years.
| Year | External Debt (INR Lakh Crore) |
| 2019 – 20 | Around ₹29.9 |
| 2020 – 21 | Around ₹38.8 |
| 2021 – 22 | Around ₹43.93 |
| 2022 – 23 | Around ₹49.31 |
| 2023 – 24 | Around ₹53.74 |
| 2024 – 25 (Projected) | About ₹57.49 |
The steady rise in external debt is largely due to higher foreign investment and financing for infrastructure projects.
Long-Term Debt
Long-term external debt refers to financial commitments that extend beyond one year. Recent reports highlight that India’s long-term debt has been growing consistently, showing an annual increase of 9.2%. This category plays a crucial role in supporting large-scale projects that require longer repayment periods.
Key Drivers of India’s Debt
1. Infrastructure Development
The expansion of highways, railway upgrades, and urban infrastructure demands substantial upfront investment. These large projects, aimed at economic progress and improving living standards, significantly add to the debt load.
2. Social Welfare Schemes
Government initiatives for poverty reduction, healthcare, education, and rural upliftment contribute to rising debt levels. While these programs promote social equity and inclusive growth, they require extensive financial resources, often leading to additional borrowing. Balancing welfare spending and debt sustainability remains a delicate task.
3. Fiscal Management
The level of borrowing is closely tied to government revenue from taxes and other sources. Shortfalls caused by economic cycles, tax reforms, or global conditions often push the government to raise funds through borrowing, thereby increasing debt obligations.
4. Exchange Rate Impact
Fluctuations in currency exchange rates and changes in global interest rates also influence debt servicing costs. A weaker rupee increases the burden of repaying foreign loans and raises the cost of acquiring new debt, making overall debt management more challenging.
Impact of Debt on the Indian Economy
India’s growing debt levels have multiple economic consequences. When managed strategically, borrowing provides the necessary capital to develop essential infrastructure, which boosts productivity, enhances connectivity, and promotes overall economic growth. Government spending through debt financing also stimulates job creation and raises consumer demand, thereby supporting economic expansion.
Public Finances
Excessive debt can pose risks to fiscal health. Rising interest obligations reduce the funds available for key sectors such as healthcare, education, and research. A significant share of government revenue is directed toward debt servicing, leaving fewer resources for developmental initiatives.
Debt-to-GDP Ratio
An increasing debt-to-GDP ratio often raises concerns for investors and global financial institutions, which may result in credit rating downgrades. Lower ratings increase borrowing costs for both the government and the private sector, creating hurdles to sustained economic progress. Thus, maintaining a balanced debt-to-GDP ratio is crucial to ensure fiscal stability and preserve investor confidence.
Debt-to-GDP Ratio Formula:
Debt-to-GDP Ratio = (Total Public Debt ÷ GDP) × 100
Investment
High levels of public borrowing can crowd out private investment. Elevated government borrowing pushes up interest rates, making it more expensive for businesses to secure capital for growth. This discourages private sector expansion and can slow economic development.
To mitigate such challenges, the government must ensure that debt is utilized for productive and long-term investments, while adhering to sound financial management practices that safeguard economic stability.
FAQs on India’s Debt
Q1. What was India’s total debt in 2024?
By March 2024, India’s outstanding debt stood at ₹168.72 lakh crore.
Q2. How much external debt does India have?
As of September 2024, India’s external debt was recorded at ₹57.49 lakh crore.
Q3. Which Indian state carries the highest debt burden?
In 2024, Maharashtra had the highest state debt, followed by Uttar Pradesh and Tamil Nadu.
Q4. How is India’s debt calculated?
Debt is measured both in absolute numbers (rupee value) and relative terms, such as the debt-to-GDP ratio, which reflects the country’s borrowing compared to its economic output.
Q5. What is the total debt of India in 2025?
By March 2025, India’s debt reached ₹181.68 lakh crore.
Q6. What is meant by a country’s internal debt?
Internal debt arises when the government borrows from domestic sources, such as issuing treasury bills, bonds, and other instruments within the country.
Q7. What are the major components of India’s debt?
India’s debt is divided into internal debt (borrowings within the country) and external debt (borrowings from foreign creditors). Together, these form the government’s total fiscal liabilities.
Q8. Why does the Indian government borrow money?
The government borrows primarily to finance developmental projects, meet budget deficits, and maintain public welfare schemes.
Q9. What is the debt-to-GDP ratio of India?
The debt-to-GDP ratio compares the country’s total debt to its gross domestic product, indicating how sustainable its borrowing levels are.
Q10. How does high debt affect India’s economy?
Rising debt leads to higher interest payments, reduced funds for essential services, potential credit rating downgrades, and limited private investment due to higher borrowing costs.
Q11. Who are India’s external creditors?
India’s external debt is borrowed from foreign governments, international financial institutions, commercial banks, and global investors.
Q12. How is India’s debt repaid?
Debt is repaid through tax revenue, non-tax revenue, and refinancing methods, along with prudent fiscal management to balance borrowing and repayment.
