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Abstract
An excess of the annual budgeted expenditure of the government over the total non-debt revenue that it expects to raise during the year shows a fiscal deficit in the budget. Such a deficit in the budget is financed through public borrowing, either internally or externally, deficit financing, giving rise to an accumulation of public debt in the country. This paper is an attempt at analyzing the trends in the volume of fiscal deficit and public debt in India during the period 2000-01 to 2016-17 and at highlighting their implications. The analysis is confined to the study of the fiscal deficit and public debt of the central Government of India and does not consider the budgetary deficits and public debt incurred by the state governments in the country.
Keywords : Deficit budget, Fiscal deficit, Public debt, Debt servicing.
Introduction
When the budgeted annual expenditure of the government of a country is in excess of the revenue it expects to receive during the year its budget is said to be a deficit budget and to meet the excess budgeted expenditure the government is forced to borrow, as households or individuals do when their income is insufficient to meet their expenditure. Such borrowing of the government is termed public debt in Public Finance literature. The government can borrow both internally, from within the country, from individuals, financial and other institutions, or externally, from outside the country, from foreign governments, international financial institutions or even from individuals living abroad. While the borrowings of the government within the country is termed internal public debt, the borrowings from external sources is termed external public debt.
The Government of India has been incurring such debt, both internal and external, ever since planned economic development of the country was launched in 1951, consequent to the budgetary deficits that it had to incur on account of increasing public expenditure, administrative and developmental.
The objective of this paper is to study the volume and trends inbudgetary deficit and public debt in India in recent years, since 2000-01 and to discuss their policy implications. The paper is confined to an analysis of India's internal public debt and does not include its external debt for the purpose of limiting the size of the paper.Further,...