Publication

This paper outlines several approaches to fiscal deficits and the influence of deficit growth on the economy, and, specifically, on the Indian economy. The author argues that there is no agreement among economists either on analytical grounds or on the basis of empirical results whether financing government expenditure by incurring fiscal deficit is good, bad, or neutral in terms of its real effects on investment and growth. In relation to expenditure on social infrastructure, the author concludes that planned expenditures on social services has risen at a faster rate than economic services. Planned expenditures for education and health have been budgeted to increase by 47% and 25%, respectively. Within infrastructure, the sharpest rise of some 200% has been recorded in road transport and shipping.