when i usually read a Newspaper,I generally came across a word of "FISCAL DEFICIT" so many times.
So many doubts came across my mind,
Like
What is Fiscal Deficit?
Why Country is worrying about Fiscal Deficit?
Once i clear these doubts,some more doubts aroused in my mind,
I will point those new doubts as you move down.
First of All,
What is Fiscal Deficit?
Every Year Govt Plans for its income and expenditure for the following year,This is known UNION BUDGET.
Budget is said to be Fiscal Deficit,if govt planning to spend more than its income.
UNITS OF FISCAL DEFICIT?
Fiscal Deficit is measured with % of GDP.
ex Fiscal Deficit=5.9% of GDP.
How the Govt will get these extra funds??
Govt manages these funds BY BORROWING.
they can borrow from other countries or from citizens itself.
Since the govt borrowed the money,so it had to be repaid with certain interest.
So,this money is collected by govt in the form of TAXES.
WHY SHOULD borrow money?? (IS FISCAL DEFICIT is good ??)
Yes,Fiscal deficit is good for Country's economy ,if it is within LIMITS.
Because,if we use Those borrowing funds to improve facilites of country,which leads to increase in Production of economy.
example,if we spend funds in improving agricultural facilites like irrigation facilites,storages etc,so that our agriculture production increase,
which means our country's economy is raised.
WHY COUNTRY IS WORRYING ABOUT FISCAL DEFICIT??
Country will be in disaster if FISCAL DEFICIT is too WIDE (i.e too large)
we know that,
Fiscal Deficit= Govt Spending-Govt Income
It means that,Govt is spending those funds,in the unproductive areas(areas which doesnt increase economic productivity) or/both Govt is not collecting TAXES (govt's income) effectively,
which leads to inflation.
WHY IT LEADS TO INFLATION??
I Hope you can figure out the answer,based on above knowledge.
If you still cant figure out,Dont hesitate ,just comment below.
I will explain it eloquently.
Do comment
Because,It is energy for me,to post more topics.
It will boost me,to help you.
So many doubts came across my mind,
Like
What is Fiscal Deficit?
Why Country is worrying about Fiscal Deficit?
Once i clear these doubts,some more doubts aroused in my mind,
I will point those new doubts as you move down.
First of All,
What is Fiscal Deficit?
Every Year Govt Plans for its income and expenditure for the following year,This is known UNION BUDGET.
Budget is said to be Fiscal Deficit,if govt planning to spend more than its income.
UNITS OF FISCAL DEFICIT?
Fiscal Deficit is measured with % of GDP.
ex Fiscal Deficit=5.9% of GDP.
How the Govt will get these extra funds??
Govt manages these funds BY BORROWING.
they can borrow from other countries or from citizens itself.
Since the govt borrowed the money,so it had to be repaid with certain interest.
So,this money is collected by govt in the form of TAXES.
WHY SHOULD borrow money?? (IS FISCAL DEFICIT is good ??)
Yes,Fiscal deficit is good for Country's economy ,if it is within LIMITS.
Because,if we use Those borrowing funds to improve facilites of country,which leads to increase in Production of economy.
example,if we spend funds in improving agricultural facilites like irrigation facilites,storages etc,so that our agriculture production increase,
which means our country's economy is raised.
WHY COUNTRY IS WORRYING ABOUT FISCAL DEFICIT??
Country will be in disaster if FISCAL DEFICIT is too WIDE (i.e too large)
we know that,
Fiscal Deficit= Govt Spending-Govt Income
It means that,Govt is spending those funds,in the unproductive areas(areas which doesnt increase economic productivity) or/both Govt is not collecting TAXES (govt's income) effectively,
which leads to inflation.
WHY IT LEADS TO INFLATION??
I Hope you can figure out the answer,based on above knowledge.
If you still cant figure out,Dont hesitate ,just comment below.
I will explain it eloquently.
Do comment
Because,It is energy for me,to post more topics.
It will boost me,to help you.
