Examine the rationale behind the government’s preference for debt-to-GDP ratio over traditional deficit targets as a primary fiscal anchor in Budget 2026–27. Evaluate the potential benefits and risks of this framework for India’s macroeconomic stability.

Question Understanding – Finding Information

Precise Syllabus Mapping: Government Budgeting. (GS Paper – III)

Marks and words limit:

• The marks-oriented approach to answering (10-mark, 150-word) questions in the question is to use Bullet Points (one idea per bullet point), Brainstorming, or a combination of both.
• The way to score good marks in questions worth (15 marks. 250 words) is to use the Heading and Subheading method while writing your answers.

Directive words:

• Examine → Explain the reasoning with economic logic
• Evaluate → Balanced assessment (pros + risks)

Focal points of the questions:

• Fiscal policy
• Fiscal anchors
• Debt-to-GDP vs fiscal deficit
• Macro-economic stability
• Medium-term fiscal sustainability

Dos & Don’ts

Do for Maximum Marks

• Use macroeconomic terms: fiscal sustainability, counter-cyclical policy
• Maintain balanced tone
• Clearly separate rationale, benefits, risks
• Link fiscal anchor to growth-inflation-stability triangle

Don’t do these Common Mistakes

• Don’t write a Budget summary
• Don’t overload with statistics
• Don’t treat debt-to-GDP as automatically superior
• Don’t ignore institutional capacity issues