New Delhi: Finance Minister Nirmala Sitharaman on Sunday outlined a cautious yet growth-oriented fiscal roadmap in the Union Budget, announcing that India’s fiscal deficit is projected to be brought down to 4.3 per cent of Gross Domestic Product (GDP) in the financial year 2026–27. The estimate reflects the government’s continued focus on fiscal consolidation while safeguarding economic momentum and priority spending.
Presenting the Budget, Sitharaman stated that the fiscal deficit for 2025–26 has been fixed at 4.4 per cent of GDP, marking a further reduction from previous years. The fiscal deficit, which represents the gap between the government’s total expenditure and its revenue receipts excluding borrowings, is primarily financed through market loans and is a key indicator of the health of public finances.
Looking ahead, the finance minister emphasized that the move towards a 4.3 per cent deficit in 2026–27 demonstrates a calibrated approach to tightening government finances. Rather than adopting sharp expenditure cuts, the Centre aims to gradually lower deficits while continuing investments in infrastructure, social welfare, and growth-enhancing sectors. This measured glide path is intended to maintain economic stability and avoid disruptions to development priorities.
Sitharaman noted that a clearly defined fiscal consolidation strategy is also designed to boost confidence among investors, credit rating agencies and global financial institutions. By committing to predictable and sustainable deficit targets, the government seeks to underline its resolve to manage public finances responsibly amid global economic uncertainties.
Alongside deficit projections, the finance minister highlighted an improvement in India’s overall debt position. She said the country’s debt-to-GDP ratio is expected to decline to 55.6 per cent, a development that points to strengthening fiscal fundamentals. The debt-to-GDP ratio is widely regarded as a crucial measure of a nation’s capacity to service its liabilities, and a downward trend typically signals improved resilience to economic shocks.
A falling debt ratio, Sitharaman explained, suggests that economic growth is outpacing the accumulation of public debt. This provides greater flexibility for the government to step up productive public investment when required, without placing undue stress on future finances.
Taken together, the lower fiscal deficit targets and the projected reduction in the debt-to-GDP ratio present a picture of disciplined fiscal management that remains supportive of growth. The Budget narrative underscores the Centre’s attempt to balance prudence with progress, aiming to strengthen macroeconomic stability while sustaining India’s development trajectory.