New Delhi, July 2 -- On Monday, the Reserve Bank of India (RBI) released its Annual Statement detailing India's external debt position at the end of March.

On the face of it, the country's overall position is satisfactory. External debt at the close of fiscal 2025-26 stood at $762.8 billion, an increase of $26.3 billion over the level recorded at the end of 2024-25. In percentage terms, it was up by one percentage point to 20.8% of GDP.

However, a reading between the lines shows that not everything is hunky-dory. The relatively modest increase in absolute terms is deceptive. It hides a valuation effect worth $24.6 billion due to the US dollar's appreciation vis-a-vis the Indian rupee and other major currencies.

That's almost as much as...