What causes a government budget deficit?

The two primary causes of the government budget deficit are, very low revenue is generated from taxation and the expenditure of the Government is much higher than its revenue generation. You can read about the Union Budget 2021 Summary in the given link.

Tax revenue could be lower due to poor taxation policy or lower economic development. Expenditure of the Government could be high due to higher spending on social welfare schemes, subsidies and military expenditures.

Further readings:

  1. Difference between Economic Survey and Union Budget
  2. Previous Years Economics Mains Questions in UPSC Civil Service Exam, General Studies Paper – 3

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