Finance Minister Nirmala Sitharaman on Wednesday said that reducing the country’s debt-to-GDP ratio will be the "core focus" for the government in the next financial year
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NEW DELHI — Finance Minister Nirmala Sitharaman on Wednesday said that reducing the country’s debt-to-GDP ratio will be the "core focus" for the government in the next financial year (2026-27).
Speaking at a media event here, Sitharaman stressed that it is crucial to bring down the debt-to-GDP ratio, which crossed 60 per cent during the Covid period.
"It is already coming down, but we need to reduce it further, and this will be a core focus in the next financial year," the Finance Minister said, noting that RBI documents and studies show worrisome debt-to-GDP ratios in some states.
"Unless managed within FRBM (Fiscal Responsibility and Budget Management Act) limits and high-interest debt is reduced, states borrow to service loans, not development -- a poor fiscal play. This threatens the 10-year momentum for Viksit Bharat by 2047," she pointed out.
The Finance Minister said that the central government has set goals for transparency in budgeting, ensuring fiscal management meets accountability standards. "We've brought down debt-to-GDP from over 60 per cent post-Covid; it's declining, with debt reduction as the core focus on the next financial year (fiscal deficit remains a marker). Entrepreneurial bankers note the changing ecosystem," she added,
Sitharaman said that the government is also working to deepen the bond market to allow more funds to flow in.
The Union government's discipline under Prime Minister (Narendra) Modi's steady leadership—now in its third term—enables India's global positioning to negotiate at the high table. This strength comes from a stable government, she said.
Sitharaman further stated that with financial inclusion, credit access via Mudra, and everyone having accounts, every Indian's credit footprint has grown, enabling formal bank credit.
"I'm saying this because we can aspire to an India that contributes 25 per cent to world trade—25 per cent of global trade emanates from India. That's the target for Viksit Bharat: Revive manufacturing, agriculture, value addition, and the services sector (which grew to over 60 per cent of GDP on its own, despite minimal government presence -- not just IT, but tourism and hospitality," the Finance Minister said.
She highlighted that private sector R&D adds value. "Despite corporate tax cuts in 2019, capacity isn't expanding—they're profiting without investing. Prime Minister Modi supports corporations for jobs and GDP, but questions remain. GCCs and data centres boost jobs, needing energy security—hence nuclear bill approval, small modular reactors as clean energy alongside pumped storage, hydro, solar, wind," Sitharaman pointed out.
"Navigating geoeconomics as a bright spot of growing fast with steady growth, keeping growth at that level every year -- is something the people of India are achieving. Each one of us, as much as all political parties and critics, should recognise it, because that's the credit that must be given to the people of India. Much against all predictions, Covid or no Covid, people just didn't sit back; the resilience of India is the story that all of us must stand by and help facilitate for the next several decades."
The Finance Minister lamented that "globally, trade isn't fair or free. India faces lectures on being inward-looking or a 'tariff king', but tariffs are weaponised -- India safeguards against dumping, yet others face no criticism".
"This is the new normal; India must negotiate carefully, leveraging economic strength," she added.