Rising short-term obligations and currency valuation shifts push India’s debt-to-GDP ratio to 20.8 per cent.
A strong US dollar and rising short-term liabilities pushed India’s external debt to $762.8 billion in March 2026.
India’s financial landscape faces new pressures from global currency shifts. Consequently, the nation’s external debt reached $762.8 billion by March 2026. This figure represents a significant $26.3 billion year-on-year expansion. Furthermore, the external debt-to-GDP ratio climbed to 20.8 per cent.
The Reserve Bank of India noted substantial currency valuation effects. A robust US dollar heavily influenced these latest economic indicators. Therefore, dollar appreciation accounted for a massive $24.6 billion valuation impact. Excluding this valuation effect, the actual increase in debt would exceed $51 billion.
Meanwhile, the structural composition of this debt reveals changing trends. Long-term obligations increased moderately, reaching $613.5 billion overall. However, short-term debt now constitutes 19.6 per cent of the total. This shift raises questions about the immediate proportions of foreign exchange reserves.
Short-term liabilities, compared with reserves, grew to 21.6 per cent. US dollar-denominated loans continue dominating India’s external financial commitments. They command a massive 55.5 per cent share of total debt. The Indian rupee follows closely, at 29.4 per cent.
The Japanese yen, IMF drawing rights, and the euro form the remainder. Loans clearly remain the largest single component of external borrowing. Additionally, currency deposits and trade credits hold substantial secondary positions. Ultimately, repayment obligations declined to 5.8 per cent of current receipts.
(Source: BFSI)
Read more on Banking News by heading to the 🔗 link.
