ICRA Sees FY27 Fiscal Deficit at 4.3% Under India’s New Debt Anchor

Overview

• The government’s fiscal framework now targets a medium-term debt path, aiming for roughly 50% debt-to-GDP by March 2031.
• ICRA projects the FY27 fiscal deficit at 4.3% of GDP, a notch below the FY26 budgeted 4.4%.
• Capital expenditure is expected to rise by about 14% to Rs 13.1 lakh crore in FY27, according to ICRA.
• Gross market borrowings in FY27 are projected to increase, with ICRA estimating about Rs 16.9 lakh crore and India Ratings pegging gross at Rs 16.14 lakh crore and net at Rs 10.6 lakh crore.
• Analysts foresee central debt easing by roughly one percentage point in FY27 with a debt ratio near 55–55.5% and caution that all metrics could shift once the new GDP series and 16th Finance Commission inputs are incorporated.