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
