Fiscal Deficit
Fiscal deficit
In a system of indicative planning reliance, fiscal policy plays an instrumental role in the economy of any country. Planning Commission of India had pointed out in the Seventh Five Year Plan that, the “Fiscal policy has a multi-dimensional role” which “particularly aims at improving the growth performance of the economy and ensuring social justice to the people. However, when a fiscal policy is not used discreetly, it is likely to create a fiscal mess.....A fiscal imbalance requires immediate corrective measures because a large fiscal deficit is non-sustainable.”
The Emergence of Fiscal deficit (or Budget Deficit):
On account of growing burden of non-development expenditure, the fiscal situation deteriorated throughout the 1980s and assumed crisis proportions by the beginning of 1991-92. Throughout the 1980s all the major indicators of fiscal imbalance largely reflected that it was on the rise. Following the US budgetary practices the concept of fiscal deficit has come into use in India:
It is the difference between the total government expenditure over government revenue thus reflects the total resource gap. This measure has been also adopted by the IMF as the principle policy target in the evaluating the performance of countries seeking assistance.
According to Reserve Bank of India, Fiscal Deficit is the difference between aggregate disbursements net of debt repayments and recovery of loans and revenue receipts and non-debt capital receipts.
Thus, we can say that Fiscal deficit or budget deficit is an economic phenomenon, where the Government's total expenditure surpasses the revenue generated. It is the difference between the government's total receipts (excluding borrowing) and total expenditure.
In simple terms, it is the difference between what the government earns and what it spends. Normally it is described as a percentage of GDP. The government accumulates this amount by currency emission or borrows the amount in order to compensate
In a system of indicative planning reliance, fiscal policy plays an instrumental role in the economy of any country. Planning Commission of India had pointed out in the Seventh Five Year Plan that, the “Fiscal policy has a multi-dimensional role” which “particularly aims at improving the growth performance of the economy and ensuring social justice to the people. However, when a fiscal policy is not used discreetly, it is likely to create a fiscal mess.....A fiscal imbalance requires immediate corrective measures because a large fiscal deficit is non-sustainable.”
The Emergence of Fiscal deficit (or Budget Deficit):
On account of growing burden of non-development expenditure, the fiscal situation deteriorated throughout the 1980s and assumed crisis proportions by the beginning of 1991-92. Throughout the 1980s all the major indicators of fiscal imbalance largely reflected that it was on the rise. Following the US budgetary practices the concept of fiscal deficit has come into use in India:
It is the difference between the total government expenditure over government revenue thus reflects the total resource gap. This measure has been also adopted by the IMF as the principle policy target in the evaluating the performance of countries seeking assistance.
According to Reserve Bank of India, Fiscal Deficit is the difference between aggregate disbursements net of debt repayments and recovery of loans and revenue receipts and non-debt capital receipts.
Thus, we can say that Fiscal deficit or budget deficit is an economic phenomenon, where the Government's total expenditure surpasses the revenue generated. It is the difference between the government's total receipts (excluding borrowing) and total expenditure.
In simple terms, it is the difference between what the government earns and what it spends. Normally it is described as a percentage of GDP. The government accumulates this amount by currency emission or borrows the amount in order to compensate