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Across the aisle: The hole in the budget

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When the numbers are finally put in the left or right column and a balance is struck, the government’s Budget statement does not look much different from a homemaker’s household budget. If we ignore the zeros, it could be the annual household budget of a rich family.

Take a look at the numbers of India’s annual Budget for 2018-19:

The deficit is Rs 6,24,276 crore. In the case of a homemaker there is no option but to borrow the money, if he or she has the capacity to borrow and someone is willing to lend. In the case of the government, the option is the same — to borrow — but the conditions are different. n A government will borrow, whether it has the capacity to borrow or not. Some governments borrow beyond their capacity and leave a huge debt for the succeeding government. n A government may borrow in the hope that the borrowing will be temporary and the ‘excess’ borrowing can be set off by finding additional receipts within the year.

Behind the Numbers

According to Budget 2018-19, the Central government will borrow Rs 6,24,276 crore. This is the famous Fiscal Deficit (FD). As in the case of all numbers, the true story is not visible by just looking at the numbers. One........

© The Financial Express