Gross Fiscal Deficit and its Financing in India: A Study of Recent Trends

Fiscal Deficit has been a matter of great concern for the Indian economy. In recent times, thanks to a number of policy initiatives, fiscal deficit is said to have been brought under a manageable rate in India. In fact, financing of Gross Fiscal Deficit is equally important as the controlling of fiscal deficit. This paper looks into the trends in GFD in India, and in more detail, it dwells into the changes in the sources of financing of GFD. The paper analyses trends in different sources of financing GFD viz. external financing and internal financing sources. The paper concludes with the note that internal financial market borrowing has turned out to be the major source of financing GFD in India in recent times.