Top 10 Indian states and UTs with the highest debt-to-GDP ratios in FY 2025–26

Indian central government, in a significant shift, has recently outlined a transition to using the debt-GDP ratio as the fiscal anchor from the 2026-27 financial year, as it aims for a decreasing debt-GDP ratio of 50±1 per cent by March 31, 2031.

According to the report, Jammu and Kashmir leads the list with 51% debt-to-GDP, the highest among all states. It is followed by Arunachal Pradesh, a relatively small state economy, having an exceptionally high fiscal deficit (8.9%).

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Notably, the northeastern states of India—Nagaland, Mizoram, Sikkim, and Meghalaya—feature prominently in the list, showing structural fiscal imbalances driven by economic disparities, limited industrialisation, rugged terrain, and sparse population.

On the contrary, Odisha tops the list with the lowest debt-to-GDP ratio (12.7%), reflecting strong fiscal discipline, good revenue mobilisation from mining and the growing manufacturing sector, and effective expenditure control.

The largest states in terms of GDP—Maharashtra (18.4%), Gujarat (15.3%), Karnataka (24.9%) and Tamil Nadu (26.1%)—have maintained moderate debt levels with sustainable fiscal policies.

Top 10 Indian States by Debt-to-GDP Ratio (FY 2025-26)