Finance Minister Nirmala Sitharaman on Wednesday said that reducing India’s debt-to-GDP ratio will be the government’s core focus in the next financial year 2026–27, stressing the need for sustained fiscal discipline to support long-term growth.
Speaking at a media interaction in the national capital, the Finance Minister noted that the country’s debt-to-GDP ratio had crossed 60 per cent during the Covid-19 period but has since begun to decline.
“It is already coming down, but we need to reduce it further, and this will be a core focus in the next financial year,” Sitharaman said, adding that Reserve Bank of India studies and documents indicate worrying debt levels in some states.
She cautioned that unless debt is managed within the Fiscal Responsibility and Budget Management (FRBM) framework and high-interest borrowings are reduced, states risk borrowing merely to service existing loans rather than for development. Such practices, she said, could threaten the long-term momentum towards Viksit Bharat by 2047.
The Finance Minister said the Centre has prioritised transparency in budgeting and accountability in fiscal management. She reiterated that while the fiscal deficit remains a key indicator, debt reduction will be the principal focus in the coming year.
Sitharaman also highlighted efforts to deepen the bond market to enable greater flow of funds into the economy.
Referring to India’s global standing, she said the Union government’s fiscal discipline under Prime Minister Narendra Modi’s stable leadership has strengthened India’s position in international economic negotiations.
On financial inclusion, the Finance Minister said expanded access to banking services, credit through schemes such as Mudra, and widespread account ownership have increased the credit footprint of citizens, enabling greater access to formal finance.
Outlining India’s long-term economic aspirations, Sitharaman said the country aims to contribute 25 per cent of global trade as part of the Viksit Bharat vision. She underlined the need to revive manufacturing and agriculture, enhance value addition, and further strengthen the services sector, which now contributes over 60 per cent to GDP.
She also flagged concerns over private sector investment, noting that despite corporate tax cuts in 2019, capacity expansion has remained limited. She said emerging areas such as Global Capability Centres and data centres are generating employment but require energy security, underlining the importance of clean energy initiatives including nuclear power, small modular reactors, pumped storage, hydro, solar and wind energy.
The Finance Minister said India has emerged as a bright spot in the global economy by maintaining steady growth amid geopolitical and economic uncertainty. She credited the resilience of the Indian people for sustaining growth despite challenges such as the Covid-19 pandemic.
Commenting on global trade conditions, Sitharaman said international trade is increasingly neither free nor fair, with tariffs often being weaponised. She said India must negotiate carefully while safeguarding domestic interests and leveraging its growing economic strength.
-IANS
