The Receipt Budget (2025–2026), published by the Budget Division of the Ministry of Finance, Government of India, reveals the nature and volume of India’s debt. As of 31st March 2025, the internal debt and other liabilities of the Government of India amount to ₹175,55,988.60 crore, which is estimated to increase to ₹190,14,852.01 crore by 31st March 2026. Similarly, as of 31st March 2025, the external debt stands at ₹6,18,295.76 crore and is projected to rise to ₹6,63,920.67 crore by 31st March 2026. The combined outstanding internal and external debt and other liabilities of the Government of India are estimated to reach ₹196,78,772.68 crore by the end of 2025–2026, compared to ₹181,74,284.36 crore at the end of 2024–2025. At the current exchange rate, the external debt of the Government of India amounts to ₹185.11 lakh crore for the current financial year and is expected to increase to ₹200.16 lakh crore in the next financial year.
Such a large volume of debt translates into an increased debt burden on the Indian working population. Even during the 1991 economic crisis, the per capita public debt was merely USD 220 — a historical low. In contrast, the per capita public debt has now risen to around USD 5,800 (approximately ₹5 lakh per person). India ranks 102nd among 165 countries in terms of the rise in per capita public debt. Higher the debt rise means lower the rank. This debt-driven economy is compelling people to borrow in order to sustain a credit-led consumption and consumer-based economy. As a result, household borrowings have increased by more than fifty percent. This alarming rise in household debt reveals a deeper economic crisis in India — one that is fundamentally driven by debt. The Government of India is pushing people into a debt trap by pursuing a trajectory of debt-led economic growth, which neither qualifies as genuine economic growth nor contributes meaningfully to people’s development. Instead, it perpetuates a cycle of indebtedness that undermines the economy and devastates the lives and livelihoods of people in India.
The Government of India is repaying its debt by raising additional revenue from the GST Compensation Fund. This effectively means that the government is shifting its debt burden onto the working population, while the super-rich and corporate classes continue to enjoy tax breaks, low tax rates, and various forms of debt relief. As a result, India continues to produce billionaires who control more than 40 percent of the nation’s wealth and over 23 percent of its national income, yet their contribution to reducing or repaying the national debt remains minimal. Indian billionaires continue to accumulate wealth and grow richer, benefiting from significant debt relief even as the country borrows heavily to sustain itself.
India can significantly increase its annual revenue by raising taxes on luxury products, imposing a wealth tax on the super-rich, and introducing an inheritance tax on property-owning classes. These measures could help reduce the country’s debt burden. The nationalisation of natural resources is another potential strategy to mobilise resources for revenue growth, which could also contribute to lowering the national debt. However, none of these policy options are a priority for successive governments in India. Instead, the government functions like a funnel — collecting revenue from the poor by taxing their everyday lives in order to protect and expand the wealth of the rich. The working masses bear the tax burden, while billionaires and corporations often evade taxes or pay very little. Moreover, corporations receive a lion’s share of their tax contributions back in various forms of incentives and reliefs, whereas the poor continue to suffer from a lack of basic amenities such as drinking water, healthcare, and educational infrastructure.
The scale of internal and external debt is not only slowing down economic growth and development in India, but it is also creating a potential debt trap for the Indian economy. This debt trap generates widespread poverty, unemployment, hunger, homelessness, and other forms of economic and social marginalisation for the masses. It exerts inflationary pressure on both household budgets and the national economy. A deepening debt trap exacerbates the economic crisis and disempowers people by weakening their capacity to participate meaningfully in the economic system. The growing cycle of borrowing and its escalating costs represent an economic disaster in the making. Debt-driven growth fundamentally undermines human welfare and development, as mounting debt restricts the government’s ability to invest in essential areas such as education, healthcare, mass employment generation, and income-enhancement programmes.
Debt-driven economic growth and development create a hallucination of progress. In reality, such a model drains real revenue, savings, and working capital in the service of debt, eroding the very economic foundations needed for the development and empowerment of citizens. This illusion of debt-led development is not a genuine path toward economic growth; rather, it is a recipe for economic crisis that undermines the nation and the potential of its people. The story of economic growth and human development in a country like India cannot be built on borrowed money. Debt-driven development reflects a deeper structural crisis confronting the nation — one that threatens its future trajectory toward prosperity. The dream of a developed India cannot be built on debt and economically weakened citizens. Therefore, it is imperative to shift away from a fictitious, debt-dependent economy toward one grounded in agriculture, industry, and the service sector — an economy that prioritises the needs and aspirations of its people over the interests of market forces.