( ISSN 2277 - 9809 (online) ISSN 2348 - 9359 (Print) ) New DOI : 10.32804/IRJMSH

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STUDY ON INDIAN ECONOMY’S FISCAL DEFICIT AND MACRO-VARIABLES

    1 Author(s):  URVI SAMANT

Vol -  13, Issue- 3 ,         Page(s) : 197 - 206  (2022 ) DOI : https://doi.org/10.32804/IRJMSH

Abstract

The macroeconomics literature has always stated that there is a positive relationship between fiscal deficit and inflation i.e., as fiscal deficit increases, there is a rise in inflation; rationale behind it being that money supply leads to demand pull inflation, but it has not been examined to be true in various developing countries’ cases, so carrying out empirical correlation between these two variables, for developing country – India becomes significant; in this research paper, the study is carried out for time period of 2011-12 to 2020-21 using correlation as a tool to find the relationship between gross fiscal deficit as % of GDP and inflation (WPI).

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Ekanayake, H. K. J. (n.d.). The Link Between Fiscal Deficit and Inflation: Do public sector wages matter? 34.
Ezeabasili, V. N., Mojekwu, J. N., & Herbert, W. E. (2012). An Empirical Analysis of Fiscal Deficits and Inflation in Nigeria. International Business and Management, 16.

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