Deficit financing is the process of a state spending lots of money than it gets in taxes and making up the shortfall by borrowing additional money. Government deficits may have a significant impact on a country’s economy. Deficit financing has occurred several times in my workplace. I am a government employee working in the agricultural sector. While at my workplace, the Agricultural sector had a poultry raising and dairy farming project, which required a massive amount of money. The revenue from our government was not enough to cater for the finance of the new Poultry Raising and Daily Farming projects since it was a massive project which required a lot of capital to start. For the government to finance the same project, it borrowed funds from World Bank because the money it received as revenue could not cater for the Launched projects.

Another instance of deficit funding that I came across was in a historical occurrence. Deficit financing was utilized to advance the organization for growth in India during the mid-1960s. The estimated sources of finance for the nation’s Initial Five-Year development plan (1961-1966) from taxes and loans at the state and federal levels revealed a significant deficit from the required to fulfill the anticipated growth objectives. This raised the possibility of using a new stream of deficit finance. The metric was the immediate increase to gross spending caused by income or capital account budget shortfalls. In essence, the strategy recommended that the government spend more than it gathered in taxes, profits via state companies, public loans, deposits and money, and other miscellaneous sources. The state paid the deficit by depleting its accrued reserves and borrowing from the banking industry, namely the Bank of India (RBI), the nation’s Central Bank, and generating money. (Hasan, 2020)