Finance Minister Nirmala Sitharaman has said that the government reduced its debt burden over the last five years and the fiscal deficit targets are being aligned to reduce it further in the coming years. She noted that the government has steadily reduced the debt over the years from 61.4 per cent of GDP in 2020-21, after the Covid-19 pandemic, to 56.1 per cent of GDP in the Budget Estimate for 2025-26. 

Further, the minister said the government aims to keep the fiscal deficit in each year in such a manner that the Central government debt is on a declining path to attain a debt to GDP level of about 50 (plus/minus 1) per cent by March 31, 2031. The government’s outstanding debt at the end of FY 2024-25 is provisionally estimated at Rs 185.94 lakh crore. While internal debt accounts for as much as Rs 157.11 lakh crore of this amount, external debt comprises Rs 8.74 lakh crore, while the remaining Rs 20.09 lakh crore is made up of other public account liabilities. 

Sitharaman said despite an environment of unprecedented geopolitical uncertainty, supply chain disruptions, and a weak global growth outlook, the Indian economy has exhibited resilience, underpinned by prudent macroeconomic management, credible fiscal consolidation, a resilient external sector performance, and sustained structural reforms. India remains the fastest-growing major economy, registering a real GDP growth of 6.5 per cent in 2024-25. 

She further said the fiscal deficit of the Union government has come down from 9.2 per cent of GDP in 2020-21 to 4.8 per cent of GDP in 2024-25, and is budgeted to further decline to 4.4 per cent of GDP in 2025-26. The average retail inflation rate, measured by the Consumer Price Index, stood at 4.6 per cent in 2024-25, the lowest in the last six years, and has eased further to 2.4 per cent in April-July 2025. Despite weakened global trade, India's export performance has demonstrated resilience, with the country's overall exports reaching an all-time high of $824.96 billion in 2024-25. This positive trend has continued into the current fiscal year, with overall exports registering an increase of 5.46 per cent during the first quarter.