What is deficit budget in India?
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A deficit budget in India occurs when the government’s total expenditures exceed its total revenues, leading to a budget deficit. Key points include:
Types of Deficits:
Revenue Deficit: When revenue expenditure surpasses revenue receipts.
Fiscal Deficit: When total expenditure exceeds total revenue (excluding borrowings).
Primary Deficit: Fiscal deficit minus interest payments on previous borrowings.
Causes: Increased spending on infrastructure and welfare, lower tax revenues, and high interest payments contribute to a deficit budget.
Implications: It can lead to government borrowing, increased public debt, potential inflation, and impacts on interest rates.
Management: Governments may manage deficits by improving tax collection, reducing non-essential spending, or implementing economic reforms.