What to Expect as States’ Debt Rises to Record Levels

Indian states are likely to borrow an unprecedented 5 trillion rupees between January and March 2026 to meet their routine government spending, the largest amount ever raised by state governments in a single quarter in India’s history, according to the Reserve Bank of India (RBI). This record debt may push up interest rates on home and business loans, delay government-funded work like school repairs, road construction and public healthcare, and leave less money for job schemes, rural wages and welfare payments.