Debt management: India must focus on sustained fiscal consolidation

Although public debt has gone up across the world after the pandemic, it is in India's interests to reduce it to a more manageable level

One of the highlights of the Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman last week, was the continuance of credible fiscal management. The government aims to restrict the fiscal deficit to 4.8 per cent of gross domestic product (GDP) this financial year, improving upon the Budget Estimate of 4.9 per cent, despite lower than expected nominal GDP growth. While it is correct that a lower outgo on capital expenditure, partly because of the restrictions related to the general elections, helped contain the deficit, it must be recognised that capex is at a much higher level than in the