Public Debt
Public Debt · sustainability · external commercial borrowings
12 min read · Updated 2026-05-25
What is Public debt under Article 292?
Public debt under Article 292 is the Centre's total internal plus external borrowing, the accumulated stock of past fiscal deficits; adding provident fund and small savings gives total liabilities. About 94 per cent of the Centre's debt is internal. General government debt was around 83 per cent of GDP in 2023-24, against the FRBM anchor of 40 per cent for the Centre and 60 per cent overall.
The story
On 30 June 2024, the Reserve Bank of India's quarterly debt-management report carried a number that has not appeared since the early 2000s: India's general government debt — Centre plus all States — had reached ₹208.61 lakh crore, or 80.5% of GDP. Add another ₹52 lakh crore of off-Budget borrowings by PSUs (NHAI, FCI, NTPC, GAIL, others), and the broader public sector debt crosses 85% of GDP.
Outside India, this would set off alarm bells. Brazil's public debt is 87% of GDP. Italy's is 142%. Japan's is 250%. Each of those countries faces a different combination of risks — currency weakness, rating downgrades, refinancing crises. India has so far avoided those headlines because 94% of its public debt is domestic (in rupees), the maturity profile is long (average 12+ years), and debt servicing is comfortably below 30% of revenue.
But the calculus is shifting. Foreign Portfolio Investors, who since the JP Morgan Bond Index inclusion in June 2024 can buy Indian government bonds passively, are now ~3% of the outstanding G-sec market — and projected to be 8-10% by 2026. External Commercial Borrowings (ECBs) by Indian corporates crossed $190 billion outstanding. Public-sector capex is being funded through 50-year interest-free loans to States that don't appear in the Centre's headline deficit. The architecture of how India borrows — and from whom — is being quietly rewritten.
Why this matters for UPSC
Public Debt falls under GS-III Indian Economy ("Government Budgeting" and "public finance"). Prelims tests definitions (public debt vs total liabilities, internal vs external) and sustainability indicators at least once every 2 years. Mains has asked debt sustainability, ECBs, and fiscal sustainability questions in 2018, 2020, 2022. Interview boards test the candidate's grasp of NK Singh's debt anchor (60% of GDP), the interest payments burden, and the role of FPI in G-secs.