Debt reduction central to fiscal policy from FY27, says FM

States urged to improve fiscal transparency

- FE BUREAU

FINANCE MINISTER NIRMALA SITHARAMAN on Wednesday made it clear that reducing the debt-to-GDP ratio will be the central pillar of the government's fiscal policy from the next financial year, with the fiscal deficit continuing as an important marker to operationalise the architecture.

Speaking at a Times Network event, Sitharaman also underlined the need for states to align with the Centre's fiscal approach.

"The central government has set clear goals for transparency in Budget-making, ensuring that fiscal management is visible to all and meets the highest standards of accountability," she said.

The minister's reiteration of debt becoming the key fiscal anchor, ahead of the Budget for FY27, signals availability of moderately higher leeway on the fiscal front in the next financial year.

In Budget FY26, the minister had committed to "staying the course for fiscal consolidation", but added that the endeavour would be to keep the fiscal deficit each year such that the Central government debt remains on a declining path as a percentage of the GDP.

This allows a bit of additional flexibility on the quantum of fiscal deficit reduction in a given year.