This paper examines the impact of fiscal deficit on economic growth in India, during the period from 1970–71 to 2018–19. Using a combination of Autoregressive Distributed Lag and Simultaneous Error Correction Approach, this study shows that fiscal deficit and revenue deficit have an adverse effect on economic growth both in the long run and in the short run. The empirical analysis confirms that fiscal deficit influences economic growth both directly, and indirectly through the routes of investment, interest rate, current account deficit and composition of government expenditure. Further, gross investment has a positive and inflation rate has a negative impact on economic growth. For a policy perspective, the government should control fiscal deficit and revenue deficit as suggested by the FRBM Act. The composition of government expenditure should be altered to devote more resources for the formation of productive capital in India.

中文翻译：

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印度的财政赤字与经济增长联系：同时的误差校正方法

本文研究了1970-71年至2018-19年间财政赤字对印度经济增长的影响。结合自回归分布式滞后和同时误差校正方法，该研究表明，财政赤字和收入赤字无论从长期还是短期都对经济增长产生不利影响。实证分析证实，财政赤字直接或间接通过投资，利率，经常账户赤字和政府支出构成间接影响经济增长。此外，总投资对经济增长有积极影响，而通货膨胀率则有不利影响。从政策角度看，政府应按照《联邦金融管理法案》的建议控制财政赤字和收入赤字。