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India’s Interest Bill in FY26
August 27 , 2025
16 hrs 0 min
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- India’s interest payments are projected to rise to ₹12.76 trillion in FY26, nearly triple the amount from a decade ago.
- Government debt rose from ₹71 trillion (51.5% of GDP) in FY16 to a projected ₹200 trillion (56.1% of GDP) by FY26.
- Public debt in FY25 stood at ₹185.94 trillion, including ₹157.11 trillion internal, ₹8.74 trillion external, and ₹20.09 trillion in public account liabilities.
- The debt-to-GDP ratio peaked at 61.4% in FY21 due to pandemic-driven fiscal expansion and is targeted to be reduced to 50% by 2031.
- Benchmark 10-year bond yields averaged 6.6% in FY21, now hovering around 6.5–6.55%, with a recent low of 6.4% in April 2025.
- The fiscal deficit shrank to 0.8% of the budgeted target in May 2025 from 3.1% a year earlier, with FY25 closing at 4.8% of GDP.
- The government uses bond buybacks and switches to ease repayment pressure, spread liabilities, and manage refinancing risks.
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