---
title: "Fiscal Consolidation: Meaning and Methods | Model Diplomat"
description: "Fiscal consolidation involves policies to reduce deficits and debt, crucial for governments like India to meet fiscal responsibility targets."
url: "https://modeldiplomat.com/learn/glossary/fiscal-consolidation"
---

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Model Diplomat Research Team · Last reviewed June 22, 2026

TL;DR

- Fiscal consolidation is the set of deliberate government policies that reduce fiscal deficits and the accumulation of public debt by raising revenue or cutting expenditure.
- How does fiscal consolidation differ from austerity?
- What is the FRBM glide path in India?
- Why can fiscal consolidation be contractionary?
- Is revenue-led or expenditure-led consolidation more effective?

[Civil Service & Diplomatic Exams](https://modeldiplomat.com/learn/civil-services/glossary)Updated June 22, 2026

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In her February 2021 Union Budget, Indian Finance Minister Nirmala Sitharaman set a fiscal consolidation glide path to reduce the deficit from 9.2 per cent of GDP to below 4.5 per cent by 2025-26.

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