AN OVERVIEW OF GROWTH AND FISCAL DEFICIT (1991-2017)
India is the sixth-largest economy in the world in terms of nominal GDP and third largest in terms of purchasing power parity, second in population ranking, and has 130th rank in the human development index with HDI 0.609 in 2015. India having features like low poverty rate, unemployment, low capital formation, high level of the national debt, slow growth rate, high inflation, fiscal deficit, etc represents itself as a developing economy. In this paper, we try to study some macroeconomic variables and their reactions toward each other. This paper focuses on fiscal deficit and economic growth covering the period from 1990-91 to 2016-17. Fiscal deficit getting more importance in recent times, especially after the IMF’s restrictions and monitoring. Almost all IMF members are adopting the fiscal consolidation methods after making it mandatory for all members by the IMF. Since 2003-04 Government of India is more proactive in adopting different policy measures to control fiscal deficit and smooth running of the Indian economy. Time series and trend analysis has been adopted to examine the objectives of the study. The results of the study show that fiscal deficit does affect economic growth but there is no direct relationship between the two variables in the context of the Indian economy, rather there are other factors too that affect the growth of the economy. In the end, we suggested that our economy must focus on HDI and other developmental activities and should try to do more and more productive expenditures which will help in increasing the per capita income and growth of the economy.
Budget deficit, fiscal deficit, growth, revenue expenditure, time series analysis.