Economic Survey calls for fiscal flexibility for the Centre, cautions States against worsening finances

The Economic Survey 2025-26, authored by Chief Economic Advisor V. Anantha Nageswaran, recommends delaying strict fiscal targets under the Fiscal Responsibility and Budget Management Act due to a volatile global environment. The survey praises the Centre's commitment to reducing its fiscal deficit but cautions states against worsening finances. It suggests maintaining the current framework of bringing down debt-to-GDP ratio to 50% with a leeway, revisiting it after five years. The survey also highlights that while achieving this target will restore trust in India’s fiscal credibility, a return to a rule-based regime could be considered later when global uncertainty subsides and debt/deficit ratios are closer to the targets.