Q. With reference to the Union Budget 2025 and its fiscal policy changes, consider the following statements:
1.The government will adopt the debt-to-GDP ratio as its new fiscal anchor from FY 2026-27.
2.The central government’s debt-to-GDP ratio is projected to decline from 57.1% in FY 2024-25 to 50% by FY 2031.
Which of the statements given above is/are correct?

[A] 1 only

[B] 2 only

[C] Both 1 and 2

[D] Neither 1 nor 2

Answer: C
Notes:

Explanation

  • Statement 1 is correct. The government is “setting the debt-GDP ratio as the new fiscal anchor, replacing the fiscal deficit target from FY 2026-27.” This is a fundamental change in fiscal policy outlined in the budget.
  • Statement 2 is correct. The debt-to-GDP ratio: “projected to: 57.1% in FY 2024-25 (Revised Estimate)… Declining towards 50% by FY 2031.” This shows the government’s long-term goal of debt reduction.
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