Debt-to-GDP Ratio Falls to 55.1% in FY27, Fiscal Deficit at 4.2%

Context

• India’s debt-to-GDP ratio in FY27 is projected to decline to ~55.1%, down from ~61.4% in FY21.
• Fiscal deficit is expected to narrow to ~4.2% of GDP in FY27, from 4.4% in FY26.
• The government targets a steadily declining debt path, aiming for ~50% (±1%) by FY31.

Core Fiscal Concepts

1. Revenue Deficit (Most Basic)

Formula: Revenue Deficit = Revenue Expenditure − Revenue Receipts
• What it shows: The government is borrowing for routine consumption (salaries, subsidies).
• Why it is bad: No asset creation → weak fiscal quality.

2. Fiscal Deficit (Borrowing Need)

• Meaning: Total funds the government needs to borrow in a year.
Formula: Fiscal Deficit = Total Expenditure − (Revenue Receipts + Non-debt Capital Receipts)
• Article data: ~4.2% of GDP in FY27

3. Primary Deficit (Current Policy Signal)

Formula: Primary Deficit = Fiscal Deficit − Interest Payments

4. Debt-to-GDP Ratio

Formula: Debt–GDP Ratio = Total Public Debt / GDP
Why it matters more than deficit:
• Reflects long-term fiscal sustainability
• Used by rating agencies, IMF, investors