FM Sitharaman: Reducing Debt-to-GDP Ratio Will Be Government’s Key Focus in 2026–27

New Delhi, Dec 17, 2025 Finance Minister Nirmala Sitharaman on Wednesday stated that reducing India’s debt-to-GDP ratio will be the government’s main priority in the upcoming financial year 2026–27. Speaking to the media in the national capital, she emphasized the need for sustained fiscal discipline to support long-term economic growth and strengthen India’s financial stability. The Finance Minister noted that India’s debt-to-GDP ratio had exceeded 60 percent during the Covid-19 period but has since started 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,” she said. Sitharaman also highlighted studies and reports from the Reserve Bank of India that indicate high debt levels in some states, stressing that unchecked borrowing could lead to states taking loans only to service existing debt rather than for development purposes. She warned that such practices could hinder India’s progress toward the Viksit Bharat vision by 2047. Sitharaman underlined that fiscal discipline remains central to the government’s economic agenda. While the fiscal deficit continues to be an important indicator, debt reduction will take precedence in the next financial year. She pointed out that the Centre has prioritized transparency in budgeting and accountability in fiscal management to ensure responsible borrowing and effective use of public funds. The Finance Minister also highlighted efforts to deepen India’s bond market to facilitate greater flow of funds into the economy. She noted that prudent fiscal management has helped India strengthen its position in international economic negotiations, reflecting the government’s stability and sound policies under Prime Minister Narendra Modi’s leadership. Discussing financial inclusion, Sitharaman said expanded access to banking services, credit under programs like Mudra, and widespread account ownership have increased the reach of formal finance. This expansion has enabled citizens to participate more fully in the economy and has supported growth in various sectors. Sitharaman outlined India’s long-term economic goals, including contributing 25 percent to global trade as part of the Viksit Bharat vision. She stressed the importance of reviving manufacturing and agriculture, enhancing value addition, and strengthening the services sector, which now contributes over 60 percent to GDP. She also expressed concern over private sector investment, noting that despite corporate tax cuts in 2019, capacity expansion has been limited. Emerging sectors such as Global Capability Centres and data centres are creating jobs but require reliable energy sources. She highlighted the government’s focus on clean energy, including nuclear power, small modular reactors, pumped storage, hydro, solar, and wind energy. Sitharaman said India has emerged as a bright spot in the global economy by maintaining steady growth amid geopolitical and economic uncertainties. She attributed this resilience to the determination and efforts of the Indian people, who have helped sustain the economy despite challenges such as the Covid-19 pandemic. On international trade, she noted that global markets are increasingly neither free nor fair, with tariffs often being used strategically. She emphasized that India must negotiate carefully, protect domestic interests, and leverage its growing economic strength to secure a strong position in global trade. FM Sitharaman: Reducing Debt-to-GDP Ratio Will Be Government’s Key Focus in 2026–27 Finance Minister Nirmala Sitharaman has announced that reducing India’s debt-to-GDP ratio will be the government’s main focus in the next financial year, 2026–27. Speaking in New Delhi, she stressed that sustained fiscal discipline is essential for long-term growth and economic stability. The country’s debt had crossed 60% during the Covid-19 period but has been gradually declining, and further reduction is now a priority. The Finance Minister pointed out that high debt levels in some states, if not managed properly, could lead to borrowing just to pay off existing loans instead of funding development projects. She emphasized that this could slow progress toward the government’s Viksit Bharat vision by 2047. Fiscal responsibility, transparency in budgeting, and accountability in spending will remain central to government policy. Sitharaman also highlighted the importance of deepening India’s bond market to channel more funds into the economy. Financial inclusion efforts, like expanded banking access, Mudra loans, and widespread account ownership, have helped more citizens participate in formal finance, boosting growth across sectors. She outlined long-term economic goals, aiming for India to contribute 25% to global trade and strengthening manufacturing, agriculture, and services, which now make up over 60% of GDP. While corporate tax cuts in 2019 were intended to spur private investment, capacity expansion has been limited. Emerging sectors like Global Capability Centres and data centres are creating jobs but require secure energy, underscoring the focus on clean energy including solar, wind, hydro, and nuclear. Sitharaman also noted India’s resilience amid global economic uncertainty, crediting the people’s determination for steady growth. On international trade, she said India must protect domestic interests while leveraging its growing economic strength, as global trade is increasingly neither free nor fair.