India’s external debt climbed to USD 762.8 billion by March 2026, marking a 3.6% increase from USD 736.5 billion last year. The Reserve Bank of India reported that valuation effects from currency movements reduced the headline rise. Without this cushion, debt growth would have been USD 51 billion, reflecting a sharper 6.9% jump.
The RBI explained that exchange rate changes softened the reported increase, masking the true pace of debt accumulation. Analysts caution that while valuation effects provided temporary relief, India’s external liabilities are expanding at a faster underlying rate. This raises concerns about repayment capacity, foreign currency exposure, and fiscal sustainability.
Experts warn that higher external debt could pressure India’s balance of payments if global interest rates remain elevated. The government may need to strengthen reserves, manage foreign inflows, and ensure prudent borrowing to safeguard stability. Rising debt also highlights the importance of attracting long-term investments rather than relying heavily on short-term external financing.
Overall, the RBI’s data shows India’s external debt trajectory is steepening. Currency effects only delay the impact, while underlying risks grow. Policymakers face the challenge of balancing growth needs with external vulnerability management, ensuring stability amid rising global uncertainties.
