New Delhi, Jan. 12 -- A momentous shift in fiscal strategy will take place in the upcoming fiscal year.

From 2026-27, the government will track government debt instead of fiscal deficit as its primary fiscal target. The new standards require the fiscal deficit to be managed in such a way that the ratio of central government debt to gross domestic product (GDP) declines to 50% (+ or -1%) by 31 March 2031.

This shift is radical in two ways. One, removing the fixed annual deficit target increases spending flexibility-thus allowing the government to spend more in a crisis without worrying about violating the fiscal compact. At the same time, fiscal prudence remains intact because the promise to restrain debt automatically checks excessive s...