A large fiscal deficit leads to a higher revenue deficit in future.? Do you agree with the statement? Give reasons

Dear Student,

Fiscal deficit shows the total borrowing requirements of the government from all the sources. As the government borrowings increases, its liability in future to repay loan with interest also increases and this lead to a higher revenue deficit ( Because Interest payments are revenue expenditure ). Thus A large fiscal deficit leads to a higher revenue deficit in future.
   
Regards.
 

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revenue deficit occurs when realized net income is less than the projected net income. This happens when the actual amount of revenue and/or the actual amount of expenditures do not correspond with budgeted revenue and expenditures.iscal Deficit increases the money supply in the economy as government borrowings increases. ... Inflation occurs due to an imbalance between demand and supply of money, changes in production and distribution cost or increase in taxes on products.
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