📷 Image: Wikimedia Commons / Telugu abbayi
Business
India’s debt ratio seems sustainable, but rising interest cost worries, says ISB professor
✍️ Business Today
🗓 30 Aug 2026, 11:19 AM
👁 4
An Indian School of Business finance professor says the country's debt‑to‑GDP ratio remains manageable, but the growing interest burden is a cause for concern.
New Delhi – A senior finance professor at the Indian School of Business (ISB) highlighted that India's overall debt-to-GDP ratio is still within a range that policymakers consider sustainable. While the headline figure does not raise immediate alarms, the professor warned that the cost of servicing that debt is climbing faster than revenue growth.
The expert explained that higher interest payments erode fiscal space, limiting the government's ability to fund development programmes and social spending. He pointed out that even a modest rise in borrowing costs can translate into a sizable increase in the annual budget outlay for interest.
Analysts have noted that the trend reflects global shifts in interest rates and domestic borrowing patterns. The professor urged the finance ministry to prioritize debt‑management strategies that curb the interest burden without compromising growth objectives.
If unchecked, the rising interest expense could pressure the fiscal deficit and potentially affect India's credit ratings. The ISB academic called for a balanced approach that safeguards macro‑economic stability while maintaining growth momentum.
The expert explained that higher interest payments erode fiscal space, limiting the government's ability to fund development programmes and social spending. He pointed out that even a modest rise in borrowing costs can translate into a sizable increase in the annual budget outlay for interest.
Analysts have noted that the trend reflects global shifts in interest rates and domestic borrowing patterns. The professor urged the finance ministry to prioritize debt‑management strategies that curb the interest burden without compromising growth objectives.
If unchecked, the rising interest expense could pressure the fiscal deficit and potentially affect India's credit ratings. The ISB academic called for a balanced approach that safeguards macro‑economic stability while maintaining growth momentum.