Net Savings of the all three entities are reducing these days. Due to which government has to fufill its need from the external borrowing.
Yes, the net saving composition of Government, Households, Corporate sector does impact fiscal deficit in India. The fiscal deficit is the difference between the government’s total expenditure and its total revenue. If the net saving composition of Government, Households, Corporate sector is high, it will lead to a reduction in the fiscal deficit.
The net savings of the various sectors contribute to the overall savings in the economy. When the government runs a fiscal deficit, it means that its expenditure exceeds its revenue, and it needs to borrow money to cover the shortfall. In this case, the government's borrowing can compete with the borrowing needs of other sectors, such as households and the corporate sector.
If the government's fiscal deficit increases, it may result in higher government borrowing, which can crowd out private sector borrowing. This can lead to increased interest rates and reduced availability of credit for households and businesses. As a result, the private sector's ability to save and invest may be affected, impacting overall economic growth.
Rahul Chavan hope this helps to understand your answer better.
