India’s fiscal deficit has been a subject of concern for economists and policymakers alike. The government’s borrowing plans have sparked debates about the ideal debt-to-GDP ratio. With a target to reduce the fiscal deficit to 4.5% of GDP by 2025-26, the government needs to adopt a strategic borrowing approach. This involves prioritizing investment in productive sectors like infrastructure and education, while minimizing unproductive expenditure.
A balanced borrowing strategy will help India achieve its growth objectives without compromising fiscal prudence. The government must also explore alternative sources of funding, such as disinvestment and multilateral loans, to reduce its reliance on domestic borrowing. By adopting a prudent borrowing strategy, India can ensure sustainable economic growth and maintain the trust of global investors.