The fiscal target was part of India's federal budget, announced on Tuesday by Finance Minister Nirmala Sitharaman. A lower fiscal deficit will boost foreign investors' sentiment and improve India's chances of a sovereign rating update as it brings the country closer to its goal of narrowing the deficit to below 4.5% of GDP by fiscal year 2025/26. India's budget gap stood at 5.8% of GDP in fiscal year 2024. CONTEXTA record surplus transfer of 2.11 trillion rupees ($25.3 billion) from the Reserve Bank of India, more than twice of what was projected in February, has helped the government narrow the fiscal deficit. "From 2026-27 onwards, our endeavour will be to keep the fiscal deficit each year such that the central government debt will be on a declining path as percentage of GDP"
