Topic: Government Budgeting.
4. Examine the implications of a high fiscal deficit on the Indian economy. Write about the measures that are needed for India to bring down its fiscal deficit. (250 words)
Difficulty level: Easy.
Reference: Indian Express
Why the question:
India needs to bring down its fiscal deficit which is highest among G20 countries.
Key Demand of the question:
To write about the impact of fiscal deficit and the steps to reduce it.
Directive:
Examine – When asked to ‘Examine’, we must investigate the topic (content words) in detail, inspect it, investigate it and establish the key facts and issues related to the topic in question. While doing so we should explain why these facts and issues are important and their implications.
Structure of the answer:
Introduction:
Begin by defining fiscal deficit.
Body:
In the first part, reasons for increased fiscal deficit in India.
Next, write about the impact of fiscal deficit – price stability and inflation, push up overall demand in the economy, raising the cost of inputs, ‘crowding out’ effect etc.
Next, suggest policy measures to overcome the above.
Conclusion:
Conclude with a way forward.
