India hits FY26 fiscal deficit target, stays on debt-cut path: Nirmala Sitharaman

Chicago: Union Finance Minister Nirmala Sitharaman stated that the central government has adhered to its fiscal consolidation roadmap and successfully achieved its fiscal deficit targets set for the 2025-26 period.

India's fiscal deficit stood at 4.4 per cent of the gross domestic product (GDP) for the year ended March 31, 2026. The deficit was at 15.19 trillion rupees or 97.5% of the government's revised estimates presented in February.

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Addressing the Indian diaspora in Chicago, the Finance Minister addressed concerns regarding government borrowing and debt levels while outlining the nation's economic targets.

"We have given ourselves a fiscal discipline path on the fiscal deficit as well. We have fulfilled the trajectory. The last mile that had to be reached by 2025-26, we have reached," Sitharaman said.

She noted that the government has established a target to reduce the debt-to-GDP ratio to 50 per cent by 2030, contrasting India's position with several advanced economies where debt levels exceed 200 per cent of GDP.

"The trust that the world has of the fiscal prudence of Prime Minister Modi- he was so when he was Chief Minister of Gujarat, he is so now, even when he is the Prime Minister of the country, the fiscal prudence shall not be compromised. As a result, credit ratings are improving," she said.

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The Minister emphasised that the fiscal management was accomplished without reducing funding allocated for social welfare projects or public capital expenditure on infrastructure.

Outlining India's broader economic resilience, Sitharaman pointed out that domestic economic growth has sustained a rate of 7 per cent or more following the COVID-19 pandemic, despite continuous global headwinds including the Russia-Ukraine war, tariff disputes, and supply disruptions in the Strait of Hormuz.

She further noted that fertiliser shortage was not felt in India because the government managed to keep the markets informed about how much it would require

"The department should be given the credit for smartly arranging fertiliser from various different routes and being able to cross the current season of crops. The forthcoming season will also require fertiliser from November. We adequately stocked for it," she said.

The Minister highlighted that while international urea prices surged tenfold from Rs 300 per cent to Rs 3,000 per cent per bag after the COVID-19 pandemic, the government absorbed the entire price increase by extending a subsidy of Rs 2,700 per cent per bag.

In addition, when global insurance providers declined coverage for vessels navigating volatile transit corridors, the government stepped in with budgetary support to cover the elevated risk premiums for shipping liners, ensuring import flows remained uninterrupted.

Addressing foreign trade strategy, Sitharaman explained that India continues to advance bilateral trade and investment treaties directly with partners such as the European Union, Australia, the UAE, and EFTA nations due to the slow pace of multilateral trade frameworks.

"So trade agreements are continuing. On a bilateral basis, we are moving with trade treaties. The multilateral treaty age has gone off," Sitharaman stated.

The Finance Minister also noted her scheduled participation in the G20 finance track meetings in Asheville, North Carolina, following bilateral economic dialogues held in Canada.

Sitharaman is in Chicago as part of an official nine-day visit to Canada and the US from August 25 to September 2. The US leg began on August 28.