The Sixteenth Finance Commission’s trajectory for the general government debt, which includes that of the Centre and states, to bring it down to 73.1 per cent by financial year 2030-31 (FY31) remains “somewhat daunting” given the unfavourable geopolitical environment and exogenous shocks, Fifteenth Finance Commission Chairman N K Singh said on Friday.
“The Sixteenth Finance Commission projects general government debt at 73.1 per cent by 2030-31, down from 84 per cent today. The trajectory is still somewhat daunting. Unfavourable geopolitics and exogenous circumstances could make the adjustment harder,” Singh said.
He was speaking at the conference of finance ministers and finance secretaries of states on “Financing India’s Journey towards Viksit Bharat”, organised by the Ministry of Finance.
At the same time, Singh also emphasised that state governments should also follow the Centre’s lead in preparing a debt-consolidation road map.
The central government has set a target to bring its debt-to-GDP (gross domestic product) ratio in the range of 49-51 per cent by FY31. The central government recorded debt at 58.2 per cent of GDP, against the annual aim of 56.1 per cent.
Kotak Mahindra Bank Founder & Non-Executive Director Uday Kotak, who was also present at the conference, said that a fiscal deficit of 7 per cent of GDP, projected for the general government, calls for consolidation. Even though there has been considerable consolidation after Covid-19 pandemic, there was a need to lower the deficit in absolute terms, Kotak added.
The central government has consolidated its fiscal deficit to 4.4 per cent of GDP in FY26 from a high of 9.2 per cent in FY21 in the aftermath of the Covid-19 pandemic.
“Given the fragility of the global economy due to geopolitical war and tariff war, there’s no room for complacency,” Kotak said.
The finance ministry’s Department of Economic Affairs (DEA) has organised the two-day conference to brainstorm policy reforms and their collaborative implementation. The conference brings together representatives from academia, banking, industry, and policymakers from across the Centre and states.
“We want to spend time to reflect collectively upon our shared goal of attaining Viksit Bharat status by 2047 and financing imperatives in our journey towards the same,” DEA Secretary Anuradha Thakur said at the conference.
“We envision reaching our shared goal. It needs to be borne in mind that this scale cannot be met solely by government budgets, and that private sector financing will need to play a critical role,” Thakur added.
