India’s External Debt Has Doubled in a Decade — What It Means for You
In the last ten years, India’s external debt has surged dramatically — rising from around ₹29 lakh crore in 2015 to nearly ₹63.94 lakh crore by June 2025. According to official data presented in the Lok Sabha, this represents a near doubling of foreign debt within roughly a decade.
On a dollar basis, that’s an increase from about $369 billion to roughly $747 billion over the same period.
Why This Matters: Impact on the Common Citizen
Although this is not a debt each individual directly owes, the ramifications can still reach every household. Here’s how:
Interest-payment burden & fiscal pressure: Rising external debt translates to higher government interest obligations. To meet these, the government may have to adjust fiscal policies — including raising taxes or cutting back on welfare spending.
Currency stability & inflation risks: A heavy external debt burden can put pressure on the national currency. If the rupee weakens, importing essentials — like oil, cooking oil, or gold — becomes costlier. That ripple effect pushes up general prices, hitting middle- and low-income families hard.
Cost of living goes up: As inflation takes hold, everyday expenses — groceries, fuel, utilities — can all rise. This turns the macroeconomic burden of debt into a tangible strain on household budgets.
What Does This Mean “Per Person”?
With total foreign debt at ₹63.94 lakh crore (as of June 2025) and a population of roughly 146 crore people, the average external debt borne per Indian works out to somewhere between ₹43,500 and ₹46,000.
While this isn’t a direct loan to each citizen, it is a useful way to illustrate the scale of the debt burden that the nation carries — and that indirectly shapes economic policy, inflation rates, and living costs.
Debt in Context: Debt-to-GDP Ratio & Reserves Cushion
Numbers alone don’t tell the full story. A key measure of sustainability is the debt-to-GDP ratio. In India’s case, external debt remains within what many experts consider a “moderate” range — currently around 19%.
Moreover, the reserves held by the Reserve Bank of India (RBI) act as a buffer, covering a substantial portion of the external debt, offering resilience against external shocks or sudden repayment demands. Long-term debt structures also provide breathing space.
The Role of Corporate & Private-Sector Borrowing
A significant factor in the rising external debt is borrowing by the private and corporate sectors. Many Indian companies have taken foreign loans over the past decade — often for infrastructure, expansion or capital investments.
When the rupee depreciates, these corporates face higher repayment costs — increasing financial stress.
Although corporate exposure is different from sovereign debt, a widespread currency depreciation or economic slowdown could create ripple effects across multiple industries, which may eventually impact jobs, consumer prices, and overall economic stability.
What Should Be Done: Challenges & Recommended Solutions
To keep India’s debt burden manageable and avoid undue pressure on citizens, experts recommend:
Fiscal discipline — the government should aim to reduce fiscal deficits and avoid excessive reliance on external borrowing.
Productive use of loans — foreign loans should be used for growth-oriented sectors like infrastructure, education or export-oriented development — not for consumption or non-productive expenses.
Strengthening exports & foreign exchange inflows — boosting export competitiveness and encouraging stable inflows (like remittances) helps support the rupee and manage debt repayment.
Corporate hedging & risk mitigation — companies borrowing in foreign currency should adopt hedging practices to protect against currency volatility.
Transparent debt policy and long-term planning — balancing long-term external liabilities with economic growth, external reserves, and responsible borrowing is key to avoiding future crises.
While India’s external debt situation is under control for now, continuous monitoring and sustainable fiscal strategies are essential to ensure that rising debt does not translate into long-term burdens on ordinary citizens.
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