Budget 2026: India FY27 Debt to GDP Ratio Set at 55.6% in Budget

The Union Budget presented on February 1, 2026, outlines the government's target for the debt to GDP ratio in FY27 and provides related fiscal parameters. 

Debt to GDP Ratio Target for FY27 

The Finance Minister stated that the debt to GDP ratio for FY27 will be 55.6% of gross domestic product. This figure follows a reduction from the FY26 estimate of 56.1% and aligns with the medium‑term objective of bringing the ratio to around 50% +/-1 by FY31. 

Historical Context of Debt Levels 

India’s debt to GDP ratio was below 50% in FY19, rose to 51.9% in FY20 and peaked at 62% during the pandemic years. Since then the ratio has remained above 55%. 

Fiscal Deficit Outlook 

The Budget also projects the fiscal deficit for FY27 at 4.2% of GDP, lower than the previous target of 4.4%. This reduction supports the broader aim of fiscal consolidation. 

Read More: NHAI Targets Debt Reduction to Under ₹2 Lakh Crore by March 2026! 

Medium‑Term Fiscal Goals 

The government has set a medium‑term goal to achieve a debt to GDP ratio of 50 ± 1% and a fiscal deficit of 3% by the end of FY31. The Economic Survey released on January 28 indicated that meeting these thresholds could enable a return to a stricter, rule‑based fiscal framework. 

Policy Implications 

Tracking the debt to GDP ratio as a specific target is intended to enhance fiscal discipline. The announced figures suggest a continued focus on reducing both debt and deficit levels while supporting growth objectives. 

Conclusion 

The 2026 Budget sets the FY27 debt to GDP ratio at 55.2% and the fiscal deficit at 4.2% of GDP, reflecting a gradual move towards the medium‑term targets of 50% debt and 3% deficit by FY31. 

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