Causality between Tax Revenue and Expenditure of Indian States

The classical axiom of a balanced budget as a virtue of sound Government collapsed under the onslaught of Great Depression of the 1930s. At that juncture, Keynes recommended deficit budgeting as an important tool for the revival of an economy. Eversince, deficit budgeting is being advocated as a means of financing economic development by both developing and developed countries. However, the problem of rising budget deficit over the years in most countries has aroused a lot of concern among economists and policy makers. The presentation of a budget has also been anxiously awaited by all classes of people in anticipation of a rise, cut or introduction of a new tax by the Government.