India's external debt surged 10.7% to $718B by December 2024
30 Mar 2025

India's external debt saw a steep increase of 10.7% at the end of December in FY 2024-25, as compared to the same period last year.

India's external debt was around $718 billion as of December-end 2024, according to Ministry of Finance data, up from around $648 billion at end of December 2023.

The overall increase during the nine-month period of the fiscal year 2024-25 was about $49 billion.

Non-financial corporations major contributor to external debt
Debt contributors

The External Debt Report did not detail the reasons for this increase. However, it is believed that non-financial corporations played a major role due to lower interest rates abroad.

This has resulted in an influx of funds to meet corporate needs and finance infrastructure projects.

Notably, the outstanding external debt of the government has witnessed a decline during this period.

Debt-to-GDP ratio and valuation effect
Economic impact

The debt-to-GDP ratio rose to 19.1% at end-December, up from 19% in September 2024, and 18.4% in December 2023.

The Economic Affairs Department attributed the increase to valuation effect due to the appreciation of the US dollar against the Indian rupee (INR) and other major currencies like yen, euro, and SDR.

This amounted to $12.7 billion during Q3 FY24-25.

Without this valuation effect, external debt would have risen by $17.9 billion instead of $5.2 billion at end-December over end-September 2024.

Long-term and short-term debt trends
Debt breakdown

At end-December 2024, long-term debt (original maturity over one year) stood at over $578 billion, reflecting a marginal increase of $0.2 billion over its end-September 2024 level.

The proportion of short-term debt in total external debt increased to 19.4% at end-December from 18.9% at end-September.

Likewise, the ratio of short-term debt to foreign exchange reserves rose to 22% at end-December from 19.1% at end-September.