Munich Personal RePEc Archive

Governance of Fiscal Deficit in India

Das, Rituparna (2006): Governance of Fiscal Deficit in India. Published in: Published as Chapter in the 'Book Research Methodology in Social Sciences and Management: Models on Indian Issues', ISBN-13: 978-3639295467 (24 September 2010): pp. 15-30.


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Indian legal frame compels the central bank of the country to increase money supply through financing fiscal deficits and thus fuels inflation, but, the liberalization of the economy has neutralized such inflationary potential. This chapter shows that the influence of such deficit financing on money stock became virtually nil during the post reform period, rather foreign exchange assets emerged as a powerful determinant of money stock.

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