Country's debt will be reduced; five-year roadmap ready; power will increase from local to global (Photo Source- PTI)
Jagran Bureau, New Delhi. As expected, Finance Minister Nirmala Sitharaman has presented a roadmap to reduce the increasing debt burden on the country in the General Budget 2026-27. Under this, he has set a target of bringing India's total debt ratio (to GDP) to 50 percent (one percent more or less) by the year 2030-31.
The Finance Minister has said that in the budgetary estimates for the year 2026-27, the ratio of debt to GDP is expected to be at the level of 55.6 percent, which is less than 56.1 percent last year. The lower the debt ratio, the more additional amount will be left for the government to spend on developmental works.
India's message to the global investor community
The Finance Minister has said that, "resources will be freed up for social priorities by reducing expenditure on interest payments." Along with reducing the level of external debt, the Finance Minister also assured the global investor community that the Indian government will maintain firm fiscal discipline.
After the poor revenue situation due to Covid, the central government had promised in the financial year 2021-22 that the fiscal deficit will be brought down to below 4.5 percent. The Finance Minister has said that the fiscal deficit is estimated to be 4.4 percent (in comparison to Gross Domestic Product-GDP) in the year 2025-26 and a target has been set to reduce it further to 4.3 percent in the next financial year (2026-27).
According to the Finance Minister, this fiscal deficit is being possible due to the government's debt management and policy of continuously reducing the debt level. According to the data of the Reserve Bank of India, by the end of March 2025, India's external (foreign) debt stood at about $ 736 billion, which was about 19.1 percent of the GDP.
total market borrowings of the government
This level has increased slightly compared to last year, but according to experts, India's external debt is still under control compared to many emerging economies. Recent reports from the World Bank state that India's external debt indicators are relatively strong. The ratio of India's foreign debt to foreign exchange reserves is also better or better than that of many other countries.
This shows that India can easily pay the interest on its debt for a long time. But at the same time the World Bank had also warned that in view of the high interest rates and economic uncertainty at the global level, India will have to remain cautious.
The Finance Minister has said that non-debt receipts and total expenditure during the next financial year are estimated at Rs 36.5 lakh crore and Rs 53.5 lakh crore respectively. The net tax receipts of the Central Government are estimated to be Rs 28.7 lakh crore. To finance the fiscal deficit, Rs 11.7 lakh crore is expected to be borrowed from the market by issuing securities.
The remaining funding will come from small savings schemes and other sources. The total market borrowing of the government is estimated to be Rs 17.2 lakh crore. In the last general budget, the Finance Minister had announced to raise Rs 14.82 crore from the market by issuing securities.
Why is it important to control fiscal deficit?
Let it be noted that reducing fiscal deficit is very important for a developing economy like India as it affects the financial health, economic stability and future growth of the country.
In simple words, high fiscal deficit (when the government's expenditure exceeds income and has to borrow more) can be harmful in the long run because a large part of the revenue goes into debt servicing.
Less money is left for development works (like roads, education, health). Inflation also increases due to high deficit. Whereas by reducing the deficit, inflation remains under control, thereby maintaining the purchasing power of the common man. Interest rates remain low and private investment increases.
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