India plans to reduce public debt to 55.6% and support economic growth
In a strategic move aimed at bolstering financial stability and restoring economic balance, Indian Finance Minister Nirmala Sitharaman announced today that India will aim to reduce its debt-to-GDP ratio to 55.6% by the 2026-2027 fiscal year, compared to approximately 56.1% in the current fiscal year . This announcement is part of a comprehensive vision adopted by the Indian government to ensure sustainable economic growth amidst current global challenges.
Controlling the fiscal deficit and strengthening discipline
During the presentation of the federal budget to Parliament, Sitharaman explained that the government is committed to fiscal discipline, projecting that India's federal budget deficit will remain at 4.4% of GDP for the fiscal year ending March 2026. Ambitions didn't stop there; a more ambitious target of 4.3% of GDP was set for the next fiscal year. These figures are a positive indicator for international investors and credit rating agencies, as the reduced deficit reflects the country's ability to manage its resources efficiently and decrease its reliance on external borrowing.
A stable economic foundation despite the challenges
Looking ahead, the Indian government recently indicated that the national economy is likely to grow between 6.8% and 7.2% during the fiscal year beginning April 2026, according to its annual economic survey. While this represents a slight slowdown compared to the projected growth rate of 7.4% for the current fiscal year, it remains robust compared to many other major economies.
The annual survey, presented by Finance Minister Nirmala Sitharaman, indicated that the domestic economy remains on a stable and solid footing. However, the minister did not overlook external risks, explaining that the slowdown in growth among India's major trading partners, coupled with disruptions to global trade caused by tariffs and geopolitical tensions, could negatively impact export volumes and investor sentiment in the short term.
Historic leaps and future aspirations: 4 times
To place these figures in their historical context, the economic study is based on an analytical comparison with India's previous economic growth cycle. India underwent a radical transformation, with its GDP rising from just $1 trillion in 2008 to $4 trillion by 2025—a fourfold increase in less than two decades.
Looking ahead, India’s ambitions extend far beyond mere recovery or conventional growth. In the next phase, GDP is projected to surge to $16 trillion by 2042. This represents an additional $12 trillion to the economy, compared to just $3 trillion in the previous cycle. This upward trajectory reflects India’s desire to solidify its position as one of the world’s economic superpowers, leveraging its demographic strength and the development of its technological and industrial sectors.
