Industry Odisha Bureau, Sep 30: India’s external debt rose to $778.2 billion by June-end, RBI data showed. Relative to GDP, it eased to 20.8%. Short-term debt against reserves climbed, while debt servicing held steady.
India ended June carrying more external debt than three months earlier. Total obligations rose $15.4 billion to $778.2 billion, RBI data showed. Yet the external debt-to-GDP ratio slipped to 20.8% from 20.9%. The stock grew, while the burden relative to output edged lower. That 0.1-point dip is marginal. Other gauges moved in different directions, revealing a more nuanced picture.
Long-term debt dominates
Long-term obligations, with maturities beyond one year, reached $624.7 billion. They rose $11.2 billion from March levels. By simple calculation, that is roughly four-fifths of the total. Short-term debt, maturing within a year, made up the rest. Its share edged up to 19.7% from 19.6%. The increase is marginal, and long-term borrowing still dominates.
Reserve cover moves the other way
A sharper shift appears when short-term debt is set against reserves. That ratio rose from 21.6% at end-March to 23% at end-June. It compares debt falling due within a year with foreign-exchange reserves. Debt-to-GDP, by contrast, measures the total stock against economic output. The two indicators therefore answer different questions. One eased slightly, while the other rose 1.4 percentage points. The RBI data does not set a safe level for either ratio.
Currency moves trim the headline
The US dollar strengthened against the yen and euro during the quarter. That cut the dollar value of debt held in those currencies. Valuation gains amounted to $0.9 billion, the RBI said. Without them, external debt would have risen $16.4 billion. The headline change therefore does not reflect fresh borrowing alone.
Dollar remains dominant
US dollar-denominated debt made up 54.8% of the total. Rupee-denominated debt followed at 29.8%. The yen accounted for 6.9%, SDRs for 4.1% and the euro 3.5%. These shares reflect the currency owed, not the creditor’s nationality.
Loans lead the liability mix
Loans formed the largest instrument category, at 34.3%. Currency and deposits followed at 22.2%, trade credit and advances at 19.1%. Debt securities accounted for 16.5%. Both government and non-government debt rose during the quarter, the RBI said. The figures do not show which sector contributed more.
Servicing costs hold steady
The debt-service ratio offers a third lens. It measures principal and interest payments against current receipts. The ratio stayed at 5.6%, unchanged from March 2026. Debt payments thus held steady relative to receipts, despite the larger stock.
Beyond the $778 billion headline
India’s June data sends three distinct signals. The debt burden relative to GDP edged lower. Short-term exposure against reserves rose more clearly. Debt servicing held steady against current receipts. No single ratio captures the full picture. Read together, they show a larger debt stock with a subtly changing structure.
