India's government debt since 1861: peaks and troughs

The longest record we hold

The debt-to-GDP page charts two IMF series. One is the World Economic Outlook figure that starts in 1991 and runs to the IMF's projections for 2031. The other is the long-run Public Finances in Modern History series, which for India starts in 1861.

That second series has 143 yearly readings: 1861 to 1891, then 1913 to 2024. The IMF dataset has no Indian figures for 1892 to 1912. Before 1947 the numbers describe the colonial government of British India, a different territory and a different state, so read the early decades as context rather than as a like-for-like comparison.

Our earlier post on India against the world covered where India stands today. This one is about how it got there.

Era by era

Gross public debt as a share of GDP, from the IMF's long-run series. Rounded to one decimal.

The peaks and troughs, and what is known about them

1929 to 1933: up two-thirds. The ratio went from 32.8% to 54.9% in four years, the highest it would reach until the series changed in 1991. These are the Great Depression years. IMF economists who compiled an earlier historical debt database link debt spikes in the early 1930s to the Depression across the advanced economies (Abbas and others, 2010). India's rise fits that pattern, though the series cannot say how much came from new borrowing and how much from GDP shrinking underneath it. Either one lifts a ratio.

1939 to 1943: halved. From 42.7% to 21.5%. Marcelo de Paiva Abreu's study of India's wartime sterling balances describes two things happening together: India piled up sterling in London during the war and used it to pay off its sterling debt, and the study links that build-up to inflation in India. Repaying debt shrinks the numerator, and inflation swells nominal GDP, the denominator. The ratio rebounded to 40.5% in 1946 and was back to 24.6% by 1948.

1950 to 1979: a quiet band. For three decades the ratio stayed between 25.1% and 40.3%. It peaked in 1968 and fell to 29.0% in 1974. The series gives no reasons for these smaller moves, and we will not guess at them.

1980 to 1990: a steady climb. The ratio rose in eight of the ten years, from 38.0% to 50.8%. In 1991 the IMF published a paper by Raja Chelliah on the growth of Indian public debt, tracing the causes of its rapid rise and warning that, on the trends of the time, it would become unsustainable by the end of the 1990s.

The 1991 break: a change in what is counted

The biggest one-year move in the whole record is from 50.8% in 1990 to 76.7% in 1991, a jump of 25.9 points. It is mostly a change of definition, not of borrowing.

From 1991 the long-run series carries the same values, to within rounding, as the IMF's general government figures, which count the Centre and the states together. The authors of the current database say that long national series usually switch from central to general government coverage at some point, and that the switch can leave a break (Mauro and others, 2013). One check on the size: 50.8 is 66% of 76.7. Our debt-to-GDP page notes that the central government alone is roughly two-thirds of India's general government debt today.

So comparing 1933's 54.9% with 2020's 88.4% compares two different measures. Compare within each stretch instead.

Since 1991

2003 to 2010: down 18.2 points. The 2003 peak came in the year Parliament passed the Fiscal Responsibility and Budget Management Act, 2003, which set limits on the central government's borrowing and deficits, and the ratio fell in each of the next seven years. A ratio also falls when nominal GDP grows faster than debt, and the series does not separate the two.

2020: the record. The pandemic year took the ratio to 88.4% in the long-run series and 90.6% in the WEO, the highest in either. It has eased since, to 81.3% and 84.8% in 2024. The IMF's World Economic Outlook presents India on a fiscal-year basis, so "2020" there broadly means 2020-21.

The two columns drift apart from about 2013 because they are different IMF releases, revised at different times. The debt-to-GDP page charts both.

Why an investor might care

Government debt is the supply side of the bond market. The more the government borrows, the more government securities the market has to absorb, and the yield on those bonds is what gilt funds, such as SBI Gilt Fund, and the 10-year constant-duration funds earn and lose on. Our guide to how debt funds work covers the mechanics. Our post on government bond index returns by maturity shows how that played out this year.

The history also shows that a debt ratio can fall without the debt being repaid, when prices and incomes grow faster than what is owed. That helps the government's arithmetic and erodes the real value of fixed-rate savings. The inflation calculator shows what a few years of high inflation does to a rupee, and inflation and your savings explains why it matters.

For the wider set of channels that run from a country's finances into fund returns, see global macro and Indian funds.

What this does not tell you

The early figures are reconstructions. GDP was not measured at the time for much of this record; the database's authors rebuilt it from historical sources.

Causes are partial. Where we cite a reason, it comes from the studies linked above. For most years the data show the level and nothing more.

The 2031 figure is a projection. The IMF revises it each April and October.

None of this is a forecast or a recommendation. For where India sits among the big economies now, see our G20 comparison.