ABSTRACT
In the wake of global economic meltdown of 2008, the US and West European countries incurred huge public expenditure, financed mainly by debt, but even today their economies have not been able to recover fully and continue to be afflicted with the problems of slow growth and unemployment. During the five-year tenure of the United Progressive Alliance (UPA) government, the same trend continued, and on an average 35 per cent of public expenditure was met out of borrowed funds. While expenditure is increasing every year, there has not been commensurate growth of tax revenue. India has a very soft tax regime for personal income tax. The government's expenditure on salary and allowances of its employees has steeply increased due to the Sixth Pay Commission award and had been a contributory factor in unsustainable fiscal deficit. Budget deficits get the support of economists following Keynesian prescription to deal with an economy facing recession.
