The whole question is " If fiscal deficit is good or bad ?"...This is debatable. Its simple actually. Let me explain. Its like a household which is running on borrowed funds. They leverage this and move ahead in life, but they have to keep in mind one simple thing, can they pay off the debt in the near future ?. If yes than they should go for the available credit. Hence in this case its was a boon the household. But if the same family borrows more than its ability to pay in the long run then they are in trouble.
So far India's fiscal deficit is 5% of that of GDP which is considered to be quite safe and on the other hand it can also help the economy to leverage debt and blossom as in the case of our household example. It also pushes the economy and the govt to do much better as they know that they have to cover up the fiscal deficit.
Fiscal deficit can also be financed by more money supply in the market but in the but this leads to inflation.
It can also be reduced bu putting more taxes on people and companies but at this juncture we cant do so as India is being looked as the country which gives everybody and foreign companies good returns.
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