The Centre’s debt-to-GDP ratio in 2026–27 may be reduced by one percentage point to nearly 55.1%, signalling a structural shift in India’s fiscal policy framework. A one-percentage-point reduction in the debt ratio would translate into a fiscal deficit of around 4.2% of GDP in FY27, compared with the budgeted 4.4% in FY26. Paradigm Shift The debt ratio, rather than the fiscal deficit alone, is emerging as the primary anchor of medium-term fiscal management, with the deficit continuing to serve as an operational tool to achieve the broader objective of sustainable public debt.