The recent surge in government spending has led to a significant increase in fiscal deficits worldwide. In India, the fiscal deficit has risen to 7.5% of the GDP, while in the US, it has reached 15% of the GDP. This has resulted in a growing concern among investors and economists, who fear that the increasing debt burden may lead to higher interest rates and reduced economic growth.
For instance, the IMF has warned that high debt levels can lead to a decrease in investor confidence, causing a decline in economic activity. As a result, governments must implement fiscal consolidation measures to reduce their deficits and prevent a potential economic downturn. With the current fiscal year drawing to a close, it remains to be seen how governments will address this issue.