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Informist, Monday, Feb. 2, 2026

--Sitharaman: To prioritise growth in fixing fiscal gap aim
--Sitharaman: Econ growth to dictate annual fiscal consolidation pace
--Sitharaman: Current pace of pvt consumption to sustain

 

NEW DELHI - The government will prioritise domestic economic growth while determining its fiscal consolidation path, Finance Minister Nirmala Sitharaman said Monday. The government will adopt a pace of consolidation that takes into account the support to growth needed for that particular financial year, she told the media. The comments come a day after the Budget proposed reducing the fiscal deficit target by 10 basis points to 4.3% of GDP for 2026-27 (Apr-Mar), marking the slowest pace of consolidation since before the COVID-19 pandemic.

 

The Budget projected the debt-to-GDP ratio at 55.6% of GDP for FY27, 50 basis points lower than the FY26 estimate of 56.1% of GDP. FY27 will be the first year in which the government targets debt as a percentage of GDP as the primary metric for tracking fiscal consolidation, rather than the fiscal deficit target used in the past. The government aims to cut its debt-to-GDP ratio to 50% by March 2031, within a 49-51?nd. This means it will have to cut its debt-to-GDP ratio by at least 140 bps each year. 

 

A contractionary fiscal policy tends to drag growth down. As such, India's GDP growth – in real terms – is projected at 6.8-7.2% in FY27, lower than the 7.4% estimated for FY26. Nominal GDP growth in FY27 is projected at 10%, up from 8% in FY26. 

 

In the post-pandemic period, the government depended on capital expenditure to drive growth. In FY26, the government also went all out to support consumption demand by providing income tax relief and cutting the goods and services tax rate in September. 

 

Sitharaman said the government's support to boost consumption demand already rolled out will sustain private consumption. According to the first advance estimates of national accounts, private consumption is projected to grow 7.0% in FY26, 20 bps lower than the 7.2% growth last year. End

 

Reported by Priyasmita Dutta, Krity Ambey, and Sagar Sen

Edited by Saji George Titus

 

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