Why in news
- The Union Finance Minister announced that India met its fiscal deficit target for FY 2025-26.
- The government reaffirmed its strategic path to lower the central government debt-to-GDP ratio to 50 percent by 2030.
What is Fiscal Consolidation?
- A policy framework aimed at reducing government fiscal deficits and public debt accumulation to maintain macroeconomic stability.
- Guided structurally in India by the Fiscal Responsibility and **Budget Management (FRBM)** Act, 2003.
Key Policy Targets
- The updated fiscal roadmap targets reducing the central government debt-to-GDP ratio to 50 percent by 2030.
- This aligns with post-pandemic consolidation plans following temporary relaxations under FRBM escape clauses.
Why it matters
- Sustained debt reduction preserves sovereign credit ratings and frees up fiscal resources for productive capital expenditure.
Key terms
Debt-to-GDP Ratio
The metric comparing a country's total sovereign debt to its gross domestic product, indicating financial leverage and repayment ability.
Prelims facts
- The FRBM Act, 2003 mandates the Central Government to specify long-term targets for fiscal deficit and sovereign debt.
Mains discussion
- Analyzing the trade-off between fiscal consolidation targets and the imperative for state-led public investment.
Source: The Hindu Business Line
Same topic · past papers
UPSC has asked this before
These previous-year questions sit on the same topic. Open one to practise the earlier ask.
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2025 · Q12 · GS I · 15 marks
Trace India's consolidation process during early phase of independence in terms of polity, economy, education and international relations. -
2018 · Q9 · General Studies · 2 marks
Consider the following statements: 1. The Fiscal Responsibility and Budget Management (FRBM) Review Committee Report has recommended a debt to GDP ratio of 60% for the general (combined) government by 2023, comprising 40% for the Central Government and 20% for the State Governments. 2. The Central Government has domestic liabilities of 21% of GDP as compared to that of 49% of GDP of the State Governments. 3. As per the Constitution of India, it is mandatory for a State to take the Central Government's consent for raising any loan if the former owes any outstanding liabilities to the latter. Which of the statements given above is/are correct? -
2015 · Q4 · General Studies · 2 marks
A decrease in tax to GDP ratio of a country indicates which of the following? 1. Slowing economic growth rate 2. Less equitable distribution of national income Select the correct answer using the codes given below -
2025 · Q61 · General Studies · 2 marks
Suppose the revenue expenditure is Rs.80,000 crores and the revenue receipts of the Government are Rs.60,000 crores. The Government budget also shows borrowings of Rs.10,000 crores and interest payments of Rs.6,000 crores. Which of the following statements are correct? I. Revenue deficit is Rs.20,000 crores. II. Fiscal deficit is Rs.10,000 crores. III. Primary deficit is Rs.4,000 crores. Select the correct answer using the code given below -
2025 · Q65 · General Studies · 2 marks
A country's fiscal deficit stands at Rs.50,000 crores. It is receiving Rs.10,000 crores through non-debt creating capital receipts. The country's interest liabilities are Rs.1,500 crores. What is the gross primary deficit?