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Fiscal deficit gives the borrowings requirement of the government. Elucidate. |
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Answer» Fiscal deficit refers to the excess of total expenditure over total receipts excluding borrowings. Hence it indicates the total borrowing requirement of the government including interest. 1. It indicates the inability of the government to meet its regular and recurring expenditure in the proposed budget. 2. It implies that government is dissaving, i.e. government is using up savings of other sectors of the economy to finance its consumption expenditure. 3. It also implies that the government has to make up this deficit from capital receipts, i.e. through borrowings or disinvestments. It means, revenue deficit either leads to an increase in liability in the form of borrowings or reduces the assets through disinvestment. |
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