ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

A+| A| A-

On Financing the Fiscal Deficit and Availability of Loanable Funds in India

On Financing the Fiscal Deficit and Availability of Loanable Funds in India

A higher fiscal deficit - financed by domestic borrowing - does not necessarily crowd out private investment by limiting the availability of loanable funds for the private sector. The fiscal deficit always finances itself and the investment always generates an equal amount of ex post savings. The supply of money is always demand-determined and credit-led at any given interest rate. The available empirical evidence from India also substantiates this.

SPECIAL ARTICLE

On Financing the Fiscal Deficit and Availability of Loanable Funds in India

Surajit Das

A higher fiscal deficit – financed by domestic borrowing

Dear reader,

To continue reading, become a subscriber.

Explore our attractive subscription offers.

Click here

Comments

(-) Hide

EPW looks forward to your comments. Please note that comments are moderated as per our comments policy. They may take some time to appear. A comment, if suitable, may be selected for publication in the Letters pages of EPW.

Back to Top