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The Centre's debt-to-GDP ratio stood at 58.2% in FY26, missing the government's own target of 56.1% by 210 basis points.
Minister of State for Finance Pankaj Chaudhary disclosed the figures in Parliament.
Outstanding liabilities have nonetheless fallen from 61.5% of GDP in FY21 to 58.2% in FY26.
The FY27 target is 55.6%, requiring a further reduction of about 260 basis points.
The fiscal deficit has narrowed sharply from 9.2% of GDP in FY21 to 4.4% in FY26 on provisional actuals.
Debt-to-GDP is a ratio: government debt divided by the size of the economy. A significant reason for the FY26 miss was not extra borrowing but a downward revision of nominal GDP following the adoption of a new national accounts series with FY23 as the base year. When the denominator shrinks, the ratio rises even if debt itself is unchanged. This is why the ratio can be improved by growing nominal GDP as much as by cutting borrowing.
Simple Analogy: If your loan stays the same but your salary is recalculated downwards, your debt-to-income ratio worsens without you having borrowed a single rupee more.
| Indicator | FY21 | FY26 |
|---|---|---|
| Debt-to-GDP ratio | 61.5% | 58.2% |
| Fiscal deficit (% of GDP) | 9.2% | 4.4% |
GS Paper III > Indian Economy > Government Budgeting and Fiscal Policy
General Awareness > Fiscal Policy and Economic Indicators
General Awareness > Indian Economy
Consider the following statements: 1. Tax revenue as a percent of GDP of India has steadily increased in the last decade. 2. Fiscal deficit as a percent of GDP of India has steadily increased in the last decade. Which of the statements given above is/are correct?
Answer: Neither 1 nor 2
Total outstanding government liabilities expressed as a percentage of GDP; the standard gauge of fiscal sustainability.
The excess of total government expenditure over total receipts excluding borrowings — effectively the amount the government must borrow in a year.
Fiscal deficit minus interest payments; it shows the current year's borrowing need excluding the cost of past debt.
One hundredth of a percentage point; a 210 bps gap equals 2.10 percentage points.