FRBM Act
Fiscal Deficit and the Shift to Debt-to-GDP Anchoring
The Fiscal Responsibility and Budget Management (FRBM) Act, 2003 provides the statutory framework for India's fiscal consolidation path, setting targets for the fiscal deficit and, more recently, the debt-to-GDP ratio.
- The N.K. Singh Committee (2016-17) reviewing the FRBM Act recommended a debt-to-GDP ratio of 60% (40% for the Centre, 20% for states) as the primary fiscal anchor, alongside a fiscal deficit target of 3% of GDP
- Under the post-pandemic glide path, the Union Budget for FY 2026-27 set the fiscal deficit target at 4.3% of GDP, continuing the decline from 4.8% (FY25 revised estimate) and fulfilling the 2021 commitment to bring the fiscal deficit below 4.5% of GDP
- From FY27 onward, the government has begun anchoring fiscal policy to the debt-to-GDP ratio (targeted at around 55-56% for FY27, glide path toward ~50% by FY31) as the primary metric, supplementing the fiscal deficit target
- Non-debt capital receipts, including disinvestment proceeds, directly reduce the fiscal deficit by adding to receipts without adding to government debt, unlike borrowings
● Tracked since February 01, 2026 · last seen August 27, 2026 · updates as the daily brief publishes
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