Answer:
Fiscal deficit refers to the excess of total Expenditure over total receipts during the given fiscal year including borrowings.
(a) If fiscal deficit is increasing then the amount of debt repayment is also increasing. The total borrowing of the government are increasing.
(b) If government requires borrowing then it may borrow from Reserve Bank of India. When RBI prints new currency to meet the deficit requirements it increases the money supply in the economy and creates inflationary pressure.
(c) The debt and financial burden of interest payments on the revenue expenditure causes a reduction on the capital expenditure for growth and development of the economy.
You need to login to perform this action.
You will be redirected in
3 sec
