India is projected to be the only emerging market economy among nine economies with GDP exceeding USD 1 trillion to reduce its government debt-to-GDP ratio between 2025 and 2031, Reserve Bank of India Deputy Governor Poonam Gupta said on Wednesday, highlighting the country's stronger fiscal position amid rising global debt and borrowing costs.

Source: ANI, via Daily Prabhat

84.3% → 75.1%India government debt-to-GDP, FY26 to FY32 (IMF projections)
~102%Global public debt projected by 2031
7.0%IMF growth projection for India, FY27 and FY28
1.8%Banks' gross NPA ratio, March 2026

Addressing the Business Standard BFSI Insight Summit, Gupta cited the International Monetary Fund's October 2026 projections: global public debt stood at 94 per cent of GDP in 2025 and is expected to cross 100 per cent in 2030, reaching nearly 102 per cent in 2031. Advanced economies' debt ratio is projected to rise from 108.2 per cent in 2025 to 115.2 per cent in 2031, and for emerging market and developing economies from 73.7 per cent to 84.2 per cent over the same period — India moves the other way.

Why India's ratio falls

Gupta attributed India's comparatively favourable outlook to fiscal consolidation, strong nominal GDP growth and a lower primary deficit. Nominal GDP growth is projected at around 11 per cent annually, above the effective interest rate on government debt of about 7 per cent, which keeps the debt ratio on a declining path. She also pointed to better quality of spending: general government capital expenditure has risen to 5.8 per cent of GDP in 2025-26 from around 4 per cent in 2019-20, and higher capex can crowd in private investment and strengthen growth potential.

On growth, the IMF projects 7.0 per cent for India in both FY 2026-27 and FY 2027-28, while the RBI's Monetary Policy Committee projects 7.1 per cent for FY 2026-27; GDP grew 7.8 per cent in FY 2025-26 and in the first quarter of FY 2026-27, and bank credit grew 19.4 per cent year-on-year as of 30 September 2026. The banking system remains sound, with the gross NPA ratio down to 1.8 per cent in March 2026 and capital adequacy at 17.7 per cent; RBI stress tests indicate the capital adequacy of 46 major banks would stay around 13 per cent even under a severe stress scenario by March 2028, above the 9 per cent regulatory minimum.

Source: Moneycontrol, via TradingView

"India enters this phase in a stronger position than most: growth is strong, inflation is contained, public debt is on a declining path and the financial system is sound," Gupta said. She also flagged risks, including El Niño-related weather conditions that could affect food security, alongside growing cyber and climate-related threats — the theme of her address on economic resilience and thinning global buffers.

Yaani in simple words: while most big countries will owe more relative to their economies by 2031, India is projected to owe less — falling from about ₹84 of debt for every ₹100 of GDP to about ₹75 — because the economy is expected to grow faster than the interest bill.