Centre pegs FY27 fiscal deficit at 4.3% of GDP

Finance minister Nirmala Sitharaman set the fiscal deficit target for the financial year 2026-27 at 4.3 percent of the GDP against 4.4 percent in 2025-26.

The fiscal deficit target for FY27 is just 10 percentage points lower than the aim for the current financial year.

In the first eight months, the Centre's fiscal deficit at Rs 9.8 lakh crore reached 62.3 percent of the estimate for the current financial year.

The fiscal deficit in FY25 stood at 4.8 percent of GDP, which was 80 bps lower than 5.6 percent in FY24.

Arun Singh, Global Chief Economist, Dun & Bradstreet said, “by targeting a fiscal deficit of 4.3 percent of GDP by FY27 and outlining a credible glide path toward bringing public debt closer to 50 percent of GDP by 2031, the government signals a firm commitment to fiscal discipline while preserving space for growth‑enhancing investment.”

Last year, the Centre decided to target a fiscal deficit path that would bring down its debt-to-GDP ratio to the 49–51 percent range by 2030-31, starting from financial year 2026-27.

In line with this decision, Sitharaman said that India’s debt to GDP ratio is set to decline to 55.6 percent in FY27.

This would be against a debt to GDP ratio of 56.1 percent in the current financial year.

"We have maintained fiscal prudence and monetary stability whilst maintaining a strong thrust on public investments," Sitharaman said while presenting the Budget on February 1.