18.8         ndian     onom
     (i) Loan Disbursals by the Government                   payment liabilities in the year also depends on the
                                                             fact as to which years in the past the governments
     The loans forwarded by the government might be
                                                             had other receipts and for what duration of
     internal (i.e., to the states, UTs, PSUs, FIs, etc.) or
                                                             maturity periods. As for example, the PF liabilities
     external (i.e., to foreign countries, foreign banks,
                                                             were not an item of such liabilities for almost first
     purchase of foreign bonds, loans to IMF and WB,
                                                             three decades after Independence. But once the
                                                             government employees started retiring, it went
     (ii) Loan Repayments by the Government                  on increasing. Future India (especially 1960s and
                                                             1970s) saw expansion of the PSUs and excessive
     Again loan payments might be internal as well as
                                                             employment generation in them (devoid of the
     external. This consists of only the capital part of
                                                             logic of labour requirement). We see the PF
     the loan repayment as the element of interest on
                                                             liabilities expanding extensively throughout the
     loans are shown as a part of the revenue expenditure.
                                                             1990s—the governments had been under pressure
     (iii) Plan Expenditure of the Government                to manage this segment either by cutting interest
     This consists of all the expenditures incurred by the   on PF or at present trying to make it a matter of
     government to finance the planned development           market economy. Same thing happened with the
     of India as well as the central government financial    element of pension and we have been able to devise
     supports to the states for their plan requirements.     a market mechanism for it once pension reforms
     (iv) Capital Expenditures on Defence by the             took place and the arrival of a pension regulatory
            Government                                       authority for the area.
     This consists of all kinds of capital expenses to       cAPitAl Deficit
     maintain the defence forces, the equipment
                                                             There is no such term in public finance or in
     purchased for them as well as the modernisation
                                                             economics as such. But in practice one usually
     expenditures. It should be kept in mind that
                                                             hears the use of the term capital crunch, scarcity
     defence is a non-plan expenditure which has capital
                                                             of capital in day-to-day economic news items.
     as well as revenue expenditures in its maintenance.
                                                             Basically, the government in the news is facing
     The revenue part of expenditure in the defence
                                                             the problem of managing as much funds, money,
     is counted in the revenue expenditures by the
                                                             capital as is required by it for public expenditure.
                                                             Such expenditure might be of revenue kind or
     (v) General Services                                    capital kind. Such difficulties have always been
                                                             with the developing economies due to their high
     These also need huge capital expenditure by the         level requirement of capital expenditures. Had
     government—the railways, postal department,             there been a term to show this situation, it would
     water supply, education, rural extension, etc.          naturally have been Capital Deficit.
     (vi) Other Liabilities of the Government
     Basically, this includes all the repayment liabilities  fiscAl Deficit
     of the government on the items of the Other             When balance of the government’s total
     Receipts. The level of liabilities depends on the       receipts (i.e., revenue + capital reeipts) and total
     fact as to how much such receipts were made             expenditures (i.e., revenue + capital expenditures)
     by the governments in the past. The amount of           turns out to be negative, it shows the situation of