‘Govt debt may ease to 5-year low of 56.8% of GDP in current fiscal’

New Delhi: The central government’s total debt is estimated to ease to a five-year low of 56.8% of the country’s gross domestic product (GDP) in the current fiscal from 58.2% a year before, minister of state for finance Pankaj Chaudhary said Monday.In absolute terms, the debt, however, will rise to ₹185.27 lakh crore (budget estimate) in FY25 from ₹171.78 lakh crore last fiscal, Chaudhary said in a written reply in the Lok Sabha. The data include the Centre’s external debt valued at the current exchange rate and other liabilities.

Citing the International Monetary Fund data, he said India’s GDP at current prices already reached $3.57 trillion in FY24.

Easing the debt ratio has been one of the key announcements of the latest budget.

Presenting the full budget for FY25 last week, finance minister Nirmala Sitharaman said, from FY27 onwards, “our endeavour will be to keep the fiscal deficit each year such that the central government debt will be on a declining path as a percentage of GDP”. She also stressed that the central government will stay the fiscal consolidation course. After a pandemic-induced spike to 61.4% of GDP in FY21 from 52.3% in the previous year, the central government’s debt ratio has since dropped year after year with expanding GDP and prudent spending.

At a post-budget briefing, finance secretary TV Somanathan said the reduction in the debt ratio will become the primary anchor for the government’s fiscal management from 2026-27, instead of fiscal deficit. The government has cut its fiscal deficit target for FY25 to 4.9% of GDP from the interim budget goal of 5.1% and aims to beat its FY26 target of containing the fiscal gap at 4.5%, according to the budget proposals.