Commitment to fiscal prudence restoring room for counter-cyclical policy: Das

India’s multiple strengths are creating a multiplier effect, generating an unprecedented growth tailwind.

- ASIT RANJAN MISHRA

At the same time, the country’s commitment to fiscal prudence is restoring headroom for future counter-cyclical policies and helping keep public debt sustainable, Shaktikanta Das (pictured), second principal secretary to the Prime Minister, said on Friday. He was delivering the inaugural “Bibek Debroy Memorial Lecture” on “Indian Economy: A Story of Rising Credibility”.“Fiscal consolidation is progressing well, with the central government’s gross fiscal deficit falling from 9.2 per cent in 2020-21 to 4.8 per cent in 2024-25... The general government gross debt-to-GDP (gross domestic product) ratio declined to 81.6 per cent in 2024-25 from a peak of 88.4 per cent in 2020-21, during the Covid-19 pandemic. The International Monetary Fund (IMF) has projected it to decline further to 76.9 per cent in 2030-31,” Das said.

From FY27, India will shift to the debt-to-GDP ratio as its primary fiscal anchor, moving away from using the fiscal deficit as the operational target.

Under the new glide path, the Centre aims to bring the debt-to-GDP ratio down to 50 per cent by FY31, with a permitted deviation of one percentage point on either side.