New Delhi
Finance Minister Nirmala Sitharaman on Wednesday said that reducing the country’s debt-to-GDP ratio will be the core focus for the government in the next financial year (2026-27). Speaking at a media event here, Sitharaman stressed that it is crucial to bring down the debt-to-GDP ratio, which crossed 60 per cent during the Covid period.
It is already coming down, but we need to reduce it further, and this will be a core focus in the next financial year, the Finance Minister said, noting that RBI documents and studies show worrisome debt-to-GDP ratios in some states.
Unless managed within FRBM (Fiscal Responsibility and Budget Management Act) limits and high-interest debt is reduced, states borrow to service loans, not development — a poor fiscal play. This threatens the 10-year momentum for Viksit Bharat by 2047, she pointed out.
The Finance Minister said that the central government has set goals for transparency in budgeting, ensuring fiscal management meets accountability standards. We’ve brought down debt-to-GDP from over 60 per cent post-Covid; it’s declining, with debt reduction as the core focus on the next financial year (fiscal deficit remains a marker). Entrepreneurial bankers note the changing ecosystem, she added,
Sitharaman said that the government is also working to deepen the bond market to allow more funds to flow in. The Union government’s discipline under Prime Minister (Narendra) Modi’s steady leadership now in its third term enables India’s global positioning to negotiate at the high table. This strength comes from a stable government, she said.
Sitharaman further stated that with financial inclusion, credit access via Mudra, and everyone having accounts, every Indian’s credit footprint has grown, enabling formal bank credit. I’m saying this because we can aspire to an India that contributes 25 per cent to world trade, 25 per cent of global trade emanates from India.
