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Need of Deficit Financing . #NeedOfDeficitFinancing

  When government needs to spend more money than it was expected to earn or generate in a particular period, to go for a desired level of growth and development.

  Once the growth had taken place the extra money spent above the income would have been reimbursed or repaid.

  It was first tried by US and followed by whole Euro-American governments. Through this route the developed world was able to come out of the menace of the Great Depression (1929).

  India tried it in 1969 and since the 1970s it became a routine phenomenon, till it became wild and illogical, demanding immediate redressal. Finally, India headed for a slow but confident process of fiscal reforms that is also known as the process of fiscal consolidation.

 

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