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The Impact of Fiscal Deficit on Economic Growth in India: An Economic Analysis

Author

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  • Dr. Sanjeev Kumar

    (Assistant Professor, Department of Economics,University of Lucknow, Lucknow (UP) - 226007, INDIA)

Abstract

The present paper examines the trends of fiscal deficit and economic growth in India from 1980-81 to 2017-18 and also analyses the impact of fiscal deficit on Indian economic growth by using regression model. The impact of fiscal deficit has always been a subject of intense debate. Some academician emphasized that fiscal deficit as a growth promoting tool due to increase in government expenditure, while others emphasize that the fiscal disciple as the most important for strengthening macroeconomic fundamentals of the economy. The regression result of the paper indicates that there is negative and significant impact of fiscal deficit on the economic growth of India. The research paper suggested that fiscal deficit within limit is good for economic growth and the government fund should be spent on beneficial projects. It is also suggested that sustainable economic growth and steady reduction in fiscal deficit can be achieved through fiscal policy reforms in India.

Suggested Citation

  • Dr. Sanjeev Kumar, 2019. "The Impact of Fiscal Deficit on Economic Growth in India: An Economic Analysis," Journal of Commerce and Trade, Society for Advanced Management Studies, vol. 14(2), pages 67-71, Octobor.
    • Handle: RePEc:jct:journl:v:14:y:2019:i:2:p:67-71
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    File URL: https://www.jctindia.org/index.php/jct/article/view/o19-sk
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    References listed on IDEAS

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    1. Chakraborty, Lekha S., 2006. "Fiscal deficit, capital formation, and crowding out: Evidence from India," Working Papers 06/43, National Institute of Public Finance and Policy.
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    More about this item

    Keywords

    Fiscal deficit; Economic growth and India.;

    JEL classification:

    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics

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