However, the Centre would still be able to cope with these issues over the medium term and contain its debt at the targeted level of 50% (plus-minus 1%) of nominal GDP by the end of FY31, they added. The new series data (with FY23 base year) released on Friday pegs FY26 nominal GDP at ₹345.47 lakh crore, 3.3% lower than what the latest budget has pencilled in on the basis of the old series data. Assuming a 10% nominal expansion for FY27–as projected in the budget–upon the revised base, the targeted fiscal deficit of ₹16.96 lakh crore will now turn out to be 4.46% of GDP, instead of the budgeted 4.31%. Similarly, the targeted fiscal deficit for FY26 would be 4.51% of GDP, against 4.36%, unless deficit in absolute term is curtailed suitably. Meanwhile, the fiscal deficit ratios for FY24 and FY25 would also have to be revised up to 5.7% and almost 4.95% of GDP, respectively, from 5.5% and 4.8%.
Debt trajectory
Lower nominal GDP would also “have some bearing on the debt consolidation roadmap, with the debt-to-GDP ratio pegged 1.9 percentage points higher at 57.5% for FY27 as against the budgeted target of 55.6%, making the consolidation path unto FY31 relatively steeper than previously estimated”, said Aditi Nayar, chief economist at ICRA. DK Pant, chief economist at India Ratings, said: “Given the new series numbers, fiscal consolidation and nominal growth rates have to be stronger than previously assumed to achieve the targets.”] “The bigger surprise to us was the downward revision in the nominal GDP base for FY26,” Rahul Bajoria and Smriti Mehra, economists at BofAS India, said in a note. This will “push the fiscal deficit and debt estimates modestly higher”, they said.