New Delhi, Feb 1 (PTI) Close to achieving the fiscal deficit target prescribed under the FRBM Act, the government has announced a new roadmap to reduce debt-GDP ratio to about 50 per cent by March 2031 from 57.1 per cent currently.

Finance Minister Nirmala Sitharaman proposed in Budget to bring down the fiscal deficit to 4.4 per cent of the GDP in FY26 from an estimated 4.8 per cent in the current financial year.

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Under the revised Fiscal Responsibility and Budget Management (FRBM) Act 2003, the government is mandated to reduce the fiscal deficit to less than 4.5 per cent by FY26.

As per the new roadmap for the next five years, the government aims to bring down debt-GDP ratio to about 56 per cent by the end of FY26.

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The glide path takes into account different scenarios for the next 5 years with debt to GDP-ratio as the anchor.

The government would endeavour to keep fiscal deficit in each year (from FY27 till FY31) such that the central government debt is on declining path to attain a debt-GDP level of about 50±1 per cent by March 31, 2031 (the last year of the 16th Finance Commission cycle), Sitharaman said during an interaction with media after the Budget presentation in the Lok Sabha.

"The path is very clear. The debt-GDP ratio will be on a declining path, depending upon what growth rate, stimulus measure or further consolidation measures would be needed," she said.

This approach would provide requisite operational flexibility to the government to respond to unforeseen developments. At the same time, it is expected to put the central government debt on sustainable trajectory in a transparent manner.

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