Interim Budget 2024: What is fiscal deficit? How does it impact national economy and a common man?
One of the key impacts of fiscal deficit is its effect on interest rates. When the government borrows money to finance its deficit, it increases the demand for credit in the economy. This increased demand can lead to higher interest rates, making it more expensive for individuals and businesses to borrow money. Higher interest rates can also lead to a decrease in investment and economic growth, which can ultimately affect the common man.
Fiscal deficit can also have an impact on the exchange rate of a country's currency. Photo: File/Representational