New Delhi, Aug. 23 -- India's interest payments on outstanding debt have nearly tripled over the past decade and are projected to increase to Rs.12.76 lakh crore in FY26, according to the Union finance ministry data. The surge reflects elevated borrowing costs as the government has continued to service loans contracted at higher rates, especially during the pandemic years, despite a moderation in bond yields since FY24. "The repayment profile of government securities has added to the rise, with a share of bonds issued earlier now coming up for servicing, thus keeping the repayment costs high during FY26," an official aware of the matter said, requesting anonymity. A sizeable stock of medium- and long-term government bonds is set to mature in the coming years. To address this, the government has ramped up borrowing across major tenors and is actively executing buybacks and switches, the official added. The Indian government uses bond buybacks and switches to smoothen large repayments and strengthen overall debt management. By buying back bonds before they mature or swapping shorter-term bonds for longer ones, the government eases repayment rushes and lowers refinancing risks, helping keep borrowing costs stable as bonds gradually mature. The government also uses bond switches, exchanging near-term securities for longer maturities, to smooth repayments and ease rollover risks, even though the strategy pushes debt further into the future. Over the past five years, Indian government bond yields have eased from the highs of the pandemic era, but continue to fluctuate with inflation and policy shifts. The benchmark 10-year yield, which averaged around 6.6% in 2020-21, now hovers around 6.5%- 6.55%, having touched a three-year low earlier this year. India's government debt climbed from Rs.71 lakh crore, or 51.5% of GDP, in FY16 to a projected Rs.200 lakh crore, or 56.1% of GDP, by FY26, according to budget documents. The pandemic years brought a sharp deterioration, with the debt-to-GDP ratio peaking at 61.4% in FY21 as the fiscal deficit widened. Since then, fiscal consolidation has helped lower the ratio, and the government aims to reduce it to around 50% by 2031. India's 10-year bond yield had fallen to 6.4% earlier in April, the lowest since December 2021, indicating strong investor confidence and expectations of continued monetary easing, according to Deloitte's latest Indian Economic Outlook report, which was released earlier this month. The fiscal deficit shrank to 0.8% of the budgeted target in May 2025 from 3.1% a year ago, supported by buoyant revenue collections, it added. Typically, higher fiscal deficits lead to increased borrowing costs because the government borrows more from the market, increasing demand for funds and driving up interest rates. The union government achieved a fiscal deficit of 4.8% of GDP in 2024-25 (FY25), with a further reduction to 4.4% targeted for 2025-26, finance minister Nirmala Sitharaman said in her budget speech earlier this year. This revised estimate marked an improvement from the earlier target of 4.9% for FY25. A spokesperson for the Union ministry of finance did not respond to Mint's emailed queries....