Published: 30 January 2026PIBEconomy
Economic Survey: Fiscal Deficit Declines to 4.4% of GDP; Debt-to-GDP Target of 50% by 2031
The Economic Survey 2025-26 highlights significant progress in fiscal consolidation. The fiscal deficit is budgeted at 4.4% of GDP in FY26, down from 4.8% in FY25, continuing a steady decline from 9.2% of GDP during the COVID peak in FY21. The revenue deficit narrowed to 0.8% of GDP in FY26 — its lowest level since FY09 — thereby freeing up greater allocation for capital expenditure.
The Government aims to reduce the debt-to-GDP ratio to 50% (plus or minus 1%) by March 2031, from 56.1% in the FY26 Budget Estimate. General government debt-to-GDP has already been reduced by 7.1 percentage points since 2020. The Survey recommends shifting the fiscal anchor from annual fiscal deficit targets to a medium-term debt-to-GDP ratio framework.
Centre's revenue receipts rose to 9.2% of GDP in FY25 (up from 8.5% average during FY16-FY20). Income tax returns filed reached 9.2 crore in FY25 (up from 6.9 crore in FY22). Gross GST collections during April-December 2025 were ₹17.4 lakh crore, registering 6.7% YoY growth. Capital expenditure rose to 4% of GDP in FY25 from pre-pandemic average of 2.7%.
0Mains angle
Q: Evaluate the fiscal consolidation trajectory highlighted in the Economic Survey 2025-26, covering the fiscal deficit trend, the debt-to-GDP anchor proposal and the gross GST collection performance in the first nine months.
Answer (50 words):
The Economic Survey 2025-26 places the fiscal deficit at 4.4 percent of GDP in FY26, down from 4.8 percent in FY25 and 9.2 percent in FY21. The Government targets debt-to-GDP of 50 percent by March 2031, down from 56.1 percent. Gross GST collections reached ₹17.4 lakh crore during April-December 2025.
6-axis classification
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Linked questionMedium
What is India's target for the debt-to-GDP ratio by March 2031, according to the Economic Survey 2025-26?
Explanation · Correct answer BThe Government of India targets reducing the debt-to-GDP ratio to 50% (±1%) by March 2031, from 56.1% in the RE 2025-26. The Economic Survey 2025-26 recommends shifting from annual fiscal deficit targets to a medium-term debt-to-GDP ratio framework.
Frequently asked questions
What is India's fiscal deficit as per Economic Survey 2025-26?
India's **fiscal deficit is budgeted at 4.4% of GDP in FY26**, down from 4.8% in FY25 and 9.2% in FY21 (COVID peak) — continuing a steady decline.
What is India's debt-to-GDP target according to Economic Survey 2025-26?
India has set a **debt-to-GDP target of 50% by 2031**, down from current levels — aiming for fiscal consolidation in line with medium-term fiscal policy.
What is fiscal deficit?
**Fiscal deficit** is the difference between the government's total expenditure and total revenue (excluding borrowings). A declining fiscal deficit indicates **improving fiscal health**.
What was India's fiscal deficit at COVID peak?
India's fiscal deficit peaked at **9.2% of GDP in FY21** during the COVID-19 pandemic. It has since declined to 4.4% in FY26, showing significant fiscal consolidation.
What is the revenue deficit in India for FY26?
India's **revenue deficit narrowed to 0.8% of GDP in FY26** — the lowest since FY09 — indicating that most government spending is on capital investment rather than current consumption.
