The Forum of Free Enterprise is a non-political organization founded in 1956 by A. D. Shroff, and has been established to educate public opinion in India on free enterprise and a democratic way of life. The Forum publishes booklets to further its objects. The following booklet is titled “India and Internal Debt Trap” was published in March 1999 and was authored by Dr. S.R.K. Rao. The author elucidates various reasons concerning India’s internal debt trap. Further, the author examines the various suggestions that are made to phase out the internal debt for the specified time. The author concludes with the view that public borrowings by the Centre and the states should be centralized and used for development purposes only and market borrowing for filling-up the “gap” between total expenditure and total revenue receipts for non-development purposes should be made constitutionally illegal. Further, the Reserve Bank of India Act, 1935 (as amended up to date) should be amended prohibiting it from facilitating funds to the Government of India by way of “Private placement of Government Bonds” and “Devolvement of Government securities which the market could not absorb when they are auctioned.