Centre may set 54.5-55% debt-to-GDP goal for FY27

Estimate for FY26 was 56.1%

- ASIT RANJAN MISHRA

The central government is likely to target a reduction in the debt-to-GDP (gross domestic product) ratio to 54.5-55 per cent for FY27 in the forthcoming Union Budget, down from the 56.1 per cent budgeted for FY26, an official said.

"The government is likely to follow a moderate consolidation path for FY27. A final call on the growth scenario for the next financial year will be taken after the release of the first advance estimates of GDP for FY26 on January 7," the official said, requesting anonymity.

In the FY26 Budget, Union Finance Minister Nirmala Sitharaman announced a shift to the debt-to-GDP ratio as the primary fiscal anchor, moving away from the practice of using the fiscal deficit as the operational target. Under the new glide path, the Centre aims to bring down the debt-to-GDP ratio to 50 per cent by FY31, with a permitted deviation of one percentage point on either side.