India’s external debt swells to $736.3 billion as country’s borrowings grow faster than GDP

India’s external debt stood at $736.3 billion as of end-March 2025, marking an increase of $67.5 billion, or about 10.09%, compared to the previous year, according to data released by the Reserve Bank of India (RBI) on Friday. This indicates that the country’s overseas borrowings rose significantly over the financial year, reflecting higher obligations to external lenders.

Moreover, India’s debt-to-GDP ratio, which measures the size of the country’s external debt relative to its economic output, rose from 18.5% in March 2024 to 19.1% in March 2025. This indicates that external debt grew at a faster pace than the overall economy during the year.

Despite this, according to RBI data, at end-March 2025, long-term debt (with original maturity of above one year) was placed at $601.9 billion, recording an increase of $60.6 billion over its level at end-March 2024.

The share of short-term external debt—defined as debt with an original maturity of up to one year—declined to 18.3% of total external debt as of end-March 2025, down from 19.1% a year earlier. However, the ratio of short-term debt to foreign exchange reserves edged up marginally to 20.1% from 19.7% over the same period, according to RBI data.

Moreover, US dollar-denominated debt remained the largest component of India’s external debt, with a share of 54.2% at end-March 2025, followed by debt denominated in the Indian rupee (31.1%), yen (6.2%), SDR2 (4.6%), and the Euro (3.2%). Outstanding debt of both government and non-government sectors increased at end-March 2025 over the level a year ago.

Similarly, loans remained the largest component of external debt, with a share of 34%, followed by currency and deposits (22.8%), trade credit and advances (17.8%) and debt securities (17.7%), RBI noted today.