what is fiscal deficit is it like a debt trap or something which doesn't end...
thnx
Shriya,
Fiscal deficit refers to the difference between the total budget expenditure and total budget receipts of the government, other than the borrowings and liabilities. That is,
Fiscal Deficit = Budget Expenditure – Budget Receipts (other than borrowing and liabilities)
A high fiscal deficit is that the country gets trapped in a cycle of debt (debt-trap). Higher borrowings imply higher interest payments, thereby, further increasing the revenue expenditure. With the rise in revenue expenditure, the fiscal deficit further increases, which in turn, necessitates further borrowings. Thus, a vicious circle of debt follows.
Fiscal deficit refers to the difference between the total budget expenditure and total budget receipts of the government, other than the borrowings and liabilities. That is,
Fiscal Deficit = Budget Expenditure – Budget Receipts (other than borrowing and liabilities)
A high fiscal deficit is that the country gets trapped in a cycle of debt (debt-trap). Higher borrowings imply higher interest payments, thereby, further increasing the revenue expenditure. With the rise in revenue expenditure, the fiscal deficit further increases, which in turn, necessitates further borrowings. Thus, a vicious circle of debt follows.