Private sector drives rise in India’s external debt as government debt declines: RBI

According to RBI data released, India’s external debt reached $762.8 billion by the end of March 2026, with the growth mainly due to stronger private‑sector borrowing while the general‑government’s outstanding debt fell.

The RBI figures indicated that external debt grew by $26.3 billion compared with the end‑March 2025 level. The central bank said that while the government’s external debt fell, non‑government debt rose, showing that the increase was driven mainly by corporations, banks and other financial entities.

It noted that at end‑March 2026 the government’s external debt was lower while non‑government debt was higher than a year earlier. Non‑financial corporations made up the biggest portion, 36.4 percent of total external debt.

Deposit‑taking institutions (excluding the central bank) held 26.5 percent of the external debt, the government 22.0 percent and other financial firms 10.2 percent. The RBI also reported that the external‑debt‑to‑GDP ratio rose to 20.8 percent at end‑March 2026, up from 19.8 percent a year earlier.

The RBI pointed out that valuation changes due to the US dollar’s appreciation versus the rupee and other major currencies added $24.6 billion. Stripping out this effect, the underlying increase would have been $51.0 billion rather than the reported $26.3 billion. Long‑term debt (maturity over one year) amounted to $613.5 billion at end‑March 2026, up $11.6 billion from the previous year.

Meanwhile, the proportion of short‑term debt in total external debt rose to 19.6 percent from 18.3 percent a year earlier, and the short‑term‑debt‑to‑foreign‑exchange‑reserves ratio climbed to 21.6 percent from 20.1 percent. According to the RBI, US‑dollar‑denominated debt remained the biggest component, making up 55.5 percent of the total.

Debt in Indian rupees came next at 29.4 percent, followed by Japanese yen (6.4 percent), Special Drawing Rights (SDR) (4.3 percent) and the euro (3.7 percent).

By composition, loans were the biggest element, accounting for 34.7 percent of external debt, then currency and deposits (22.3 percent), trade credit and advances (19.0 percent) and debt securities (16.1 percent).

Published on June 30, 2026