New Delhi, Feb. 2 -- The Union budget has set a new five-year target to cut the central government's debt to 50% of gross domestic product, give or take 1%, by 31 March, 2031. The budget, presented by finance minister Nirmala Sitharaman on Saturday, also sought to signal the Narendra Modi administration's commitment to fiscal prudence and infrastructure creation, including by supporting states.

The budget documents showed that the new goal is to keep fiscal deficit -- the gap between revenue receipts and spending -- in each year from FY27 to FY31 such that the Centre's debt as a share of GDP reaches this target, down from 57.1% in FY25, provided there are no major exogenous macro-economic shocks.

Department of Economic Affairs secretary...