By Suresh Unnithan
Thiruvananthapuram:Is the Indian Economy in distress? This question is alarming not just the business community, but the public at large. They are anxious for Industrial growth, the stock market and the rupee are constantly dipping and the purchasing power of the consumers is on the decline, compared to previous years. Anyone with a minimum fiscal understanding is increasingly worried at the escalating national debt and declining trend in trade and related revenue, particularly the trade deficit which is swelling.
Contrary to the make believe perceptions of the pro-ruling soothsayers, India’s economy is under increasing stress. As per financial pundits, other than the GDP and GVA the stock market indices and National debt are the two visible indicators of the fiscal health of the nation. While the stock market is witnessing mayhem every trading day for the past few months, the national debt is escalating with no respite in sight. The stock market has tumbled over 11000 points from its all-time high of 85,978 (on 27th September 2024) to 74,454.41 (24 February 2025). This sharp drop wiped out over Rs 50 lakh crore of retail investors. According to a research report there are over 150 million domestic investors in the stock market. The Public Debt (Government Debt) of India has crossed 181, 74,284.36 crore, which could breach the 200 lakh crore (196, 78,772.68 crore) mark by the end of next fiscal. The escalating trade deficit is also worrying and US president Donald Trump’s maverick decision on reciprocal tariff on Indian goods can further worsen our export economy.
In March 2014, the total debt (internal and external) was Rs. 53.11 lakh crore, whereas in September 2019 the same increased to Rs. 91.01 lakh crore. India’s national debt in 2024-2025 is estimated to be 181, 74,284.36 crore rupees, according to the Union Budget 2025. This is equivalent to about $3,120.18 billion or $3.12018 trillion
It is worrying that our total debt is almost equal to the Real GDP recorded in the financial year 2024-25, ₹184.88 lakh crore. According to a financial report “India has been investing and borrowing money from commercial banks as well as several non-banking finance companies, and its national debt today makes up almost 70 percent of its GDP. Luckily, even though the national debt is forecast to increase, this share of GDP is predicted to decrease, as is the trade deficit in the long run.”
The Indian economy is reportedly growing at a better pace. “But it is equally disheartening; our national debt is escalating at an alarming rate. While during the past five years our economic growth (GDP) was hovering around 6.5% the total debt has doubled.” According to a report from Aaron O’Neill “India’s National Debt has doubled from $1.743.28 trillion in 2019 to $ 3.425.35 trillion in 2025, which is almost a 100% escalation. This debt is likely to shoot up to $4.891.00 trillion by 2029.”
The recent budget proposals presented in parliament by the finance minister tried to depict a robust picture of our economic growth, but in reality the fiscal condition of the country is worrying. In its report O’Neill cautions, “India’s debt-to-GDP ratio has been a growing concern. As of 2024, our debt-to-GDP ratio stands at approximately 83.1%, which is alarming.” The International Monetary Fund (IMF) has also forecasted India’s debt-to-GDP ratio at 82.3% in FY25.
GDP (Gross domestic product) represents the total market value of all goods and services that are produced within a country per year. It is the prime indicator of the economic strength of a country.
As per another fiscal report “the central government’s debt (public debt) over the most recent nine years has risen 174%, while there has been a 100 percent increase in external debt during a similar period, between 2013–14 and 2022–23. External debt is a part of the government’s total debt.”
India’s per capita net national income (NNI) is estimated to be around 200,000 rupees in Fiscal 2025 and the per capita debt is 125340 rupees. Which means every individual in this country bears a debt burden to the tune of Rs 125340.
India’s swelling public debt results in negative outcomes, including higher borrowing costs, currency market instability, and increased inflation expectations. These factors can reduce government spending on essential areas, ultimately impacting economic growth. There is a visible slump in the manufacturing sector that results in declining export revenue. The import has been on the rise, as a result the trade deficit is on an all-time high of 22.99 USD Billion in January of 2025.
Trade deficit occurs when the value of a country’s imports exceeds the value of its exports. The trade deficit leads to currency depreciation and as a result the cost of import will again scale upwards along with the external debt. In the last decade the Indian rupee has depreciated over 27 points against the US Dollar. This is causing enormous fiscal pressure on importers and the equity market. The equity market is dipping every day due to selling pressure from FIIs. The on-going mayhem in the stock market has emptied the cash reserve of millions of retail investors.
Economic pundits, at large, feel fiscal policies formulated with a “myopic vision to retain political power” has made our economy debt ridden. “To appease the voters mindless economic juggling is adopted. Such fiscal manipulations could potentially lead the country to bankruptcy, forget about the tall claims of attaining a $10 trillion economy.”
Currently India is the world’s fifth-largest economy by nominal GDP and the third-largest by purchasing power parity (PPP); on a per capita income basis, India ranked 141th by GDP (nominal) and 119th by GDP (PPP). (GDP per capita Nominal $2,940, PPP- $11,942). But high public debt levels can increase the vulnerability of the economy to external shocks and financial crises and also disturb the nation’s financial equilibrium.
