According to the 2025 budget, by what year does India aim to reduce central government debt to 50% of GDP?
Show answer & explanation
Correct answer: D
Explanation
Solution: The correct answer is March 2031.
Explanation:
☛ In the Union Budget 2025-26, the Government of India introduced a strategic shift in its fiscal consolidation framework, moving towards anchoring targets to the debt-to-GDP ratio rather than solely focusing on the annual fiscal deficit.
☛ Under this new medium-term framework, the central government aims to bring down its debt-to-GDP ratio to 50% of GDP (within a range of ±1%) by March 2031 (end of FY 2030-31).
☛ For the financial year 2025-26, the fiscal deficit was projected at 4.4% of GDP, continuing the glide path down from 4.8% in FY 2024-25 (Revised Estimates).
Extra Exam-Relevant Facts:
☛ FRBM Act, 2003: The Fiscal Responsibility and Budget Management Act was enacted in 2003 to institutionalize fiscal discipline and reduce fiscal deficits.
☛ N. K. Singh Committee (2016): This committee recommended a combined general government debt-to-GDP ratio of 60% (40% for the Central Government and 20% for State Governments).
☛ Capital Expenditure: In the Union Budget 2025-26, the capital expenditure (Capex) outlay was enhanced to approximately ₹11.21 lakh crore.
Important One-Liners for Upcoming Exams:
☛ Which Article of the Indian Constitution provides for the Annual Financial Statement? → Article 112
☛ In which year was the FRBM Act enacted in India? → 2003
☛ Who headed the FRBM Review Committee constituted in 2016? → N. K. Singh
☛ What was the fiscal deficit target set for FY 2025-26 in the Budget? → 4.4% of GDP
☛ What constitutional term is used instead of the word 'Budget' in India? → Annual Financial Statement