India’s government debt has been on a declining trajectory since the Covid-19 pandemic, falling from 61.4 per cent of GDP in 2020-21 to 56.1 per cent in the Budget Estimate for 2025-26. The Finance Ministry has committed to maintaining fiscal deficit targets that will further reduce the debt-to-GDP ratio to approximately 50 per cent, plus or minus 1 per cent, by March 31, 2031.
The government’s outstanding debt at the end of FY2024-25 is provisionally estimated at Rs185.94 trillion. Of this, internal debt constitutes Rs157.11 trillion, external debt stands at Rs8.74 trillion, and Rs20.09 trillion is attributed to other public account liabilities.
Despite global geopolitical instability, supply chain disruptions, and weak international growth, the Indian economy has demonstrated resilience. Real GDP growth reached 6.5 per cent in 2024-25, maintaining India’s position as the fastest-growing major economy. The fiscal deficit has narrowed from 9.2 per cent of GDP in 2020-21 to 4.8 per cent in 2024-25, with a further reduction to 4.4 per cent projected for 2025-26.
Retail inflation, measured by the Consumer Price Index, averaged 4.6 per cent in 2024-25, the lowest in six years, and eased further to 2.4 per cent during April–July 2025. India’s export performance remained robust despite weakened global trade, with total exports reaching a record $824.96 billion in 2024-25 and rising by 5.46 per cent in the first quarter of the current fiscal year.
India’s foreign exchange reserves now cover more than 11 months of goods imports, underscoring macroeconomic stability. The government has also implemented targeted welfare schemes to shield vulnerable populations from economic volatility while promoting inclusive growth. These include the Pradhan Mantri Garib Kalyan Anna Yojana, PM-KISAN, MGNREGS, PMAY, Deen Dayal Upadhyaya Grameen Kaushalya Yojana, Stand Up India Scheme, and the Deendayal Antyodaya Yojana-National Rural Livelihoods Mission.
