Debt-to-GDP Ratio
Debt & Borrowing Intermediateऋण-जीडीपी अनुपात
Definition
The debt-to-GDP ratio measures total government debt as a percentage of the country's gross domestic product. It indicates the government's ability to repay its debt. A ratio above 60% is generally considered high for developing countries. India aims to bring it below 60% as mandated by the FRBM Act amendments.
Formula
How Debt-to-GDP Ratio Appears in India's Budget
India's debt-to-GDP ratio is around 55.6% in 2026-27 BE, gradually declining from a peak during COVID-19.
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Why Debt-to-GDP Ratio Matters
Understanding debt-to-gdp ratio is essential for anyone following government finances, preparing for competitive exams, or analysing India's economic policy. This concept directly affects how the government allocates resources and plans its fiscal strategy.
In the context of India's Union Budget 2026-27, with a total size of Rs 53.47 lakh crore, terms like debt-to-gdp ratio help citizens and analysts evaluate whether the government is on the right fiscal path. The numbers in the budget are only meaningful when one understands the underlying concepts.
For UPSC aspirants, debt-to-gdp ratio is frequently tested in both Prelims and Mains, particularly in Paper III (Economic Development). For CA and MBA students, this concept appears in public finance and macroeconomics courses.
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