India Achieves Fiscal Deficit Target for 2025-26, Enhancing Credit Ratings
India has successfully met its fiscal deficit target for the financial year 2025-26, according to Union Finance Minister Nirmala Sitharaman. Speaking to the Indian diaspora in Chicago, she emphasized that the government has adhered to its fiscal discipline plan. India’s fiscal deficit for the year ending March 31, 2026, was recorded at 4.4% of GDP, amounting to Rs 15.19 trillion, which represents 97.5% of the revised estimate released in February.
Government Borrowing and Debt Management
Sitharaman addressed concerns regarding government borrowing and the national debt. She stated that the government aims to achieve a debt-to-GDP ratio of 50% by 2030, contrasting India’s target with advanced economies where debt levels exceed 200% of GDP. She expressed confidence in the fiscal prudence of Prime Minister Modi, noting that this approach has led to improved credit ratings for the country.
The finance minister highlighted that the government has managed its fiscal responsibilities without reducing funding for social welfare programs or public infrastructure projects. She pointed out that India’s economic growth has remained robust at 7% or more post-COVID-19, despite global challenges such as the Russia-Ukraine conflict and tariff disputes.
Fertiliser Supply Management
Sitharaman also discussed the government’s efforts to ensure a stable supply of fertilisers amid rising prices. She credited the department for effectively managing fertiliser procurement and maintaining adequate stocks for upcoming crop seasons. International urea prices surged tenfold after the pandemic, increasing from Rs 300 to Rs 3,000 per bag. The government absorbed this cost by providing a subsidy of Rs 2,700 per bag.
Additionally, she mentioned that the government offered budgetary support to cover higher risk premiums for shipping vessels, which were affected by volatile transit corridors. This support was crucial in ensuring uninterrupted fertiliser imports.
Bilateral Trade Initiatives
On the foreign trade front, Sitharaman stated that India is actively pursuing bilateral trade and investment treaties with various partners, including the European Union, Australia, the UAE, and EFTA nations. She noted that progress on multilateral trade frameworks has been slow, prompting a shift towards bilateral agreements.
Sitharaman is currently in Chicago as part of a nine-day official visit to Canada and the US, which began on August 25. Following her engagements in Chicago, she is scheduled to attend G20 finance track meetings in Asheville, North Carolina, after participating in bilateral economic dialogues in Canada.
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