Question

‘The fiscal deficit gives the borrowing requirement of the government’. Elucidate.

Answer 1

Explanation:

Fiscal deficit refers to the excess of total expenditure over total receipts excluding borrowings.

Answer 2

Answer:

Fiscal deficit shows the difference between the ‘total expenditure’ and ‘total receipts’ which excludes the aspect of borrowings by the government.

Explanation:

It shows the ‘borrowing requirement’ for the government which includes the interest. For the development and growth when the government has to ‘spend more money’ than it was expected to generate during a particular period.

This deficit is taken care of by borrowing or by printing more currencies. Printing currencies has the problem of inflation. Hence the government has the last solution left for borrowing money.