India Aims to Slash Debt-to-GDP to 55% by FY27, Shifts Fiscal Anchor

• Central government targets reducing Debt-to-GDP ratio to 54.5-55% by FY27, down from FY26's estimated 56.1%.
• Debt-to-GDP ratio is now the primary fiscal anchor, replacing fiscal deficit, with a long-term goal of 50% by FY31.
• Strategy involves mid-level fiscal consolidation to avoid negative growth impact; final FY27 plan due Jan 7.
• Flexible strategy for FY27-FY31 considers various GDP growth scenarios and consolidation options.
• IMF advises more ambitious debt targets including state liabilities; CARE Ratings projects 50% debt by FY31 with 10.7% average GDP growth.

Why It Matters: India shifts fiscal focus to debt reduction, targeting 55% Debt-to-GDP by FY27 with a flexible strategy.