The Twin Deficit in India

The finance ministry has warned against extending a free food ration scheme beyond september, with the worry that it will cost a further 80 thousand kro rupees. The thing is, if we keep spending what we don't have, we will have to resort to higher borrowings. But you can't just borrow money willie nilly. An excess supply of rupees will lead to a fall in its value. To combat a fall in Its value, the arbi will have to sell dollars from its for ex reserves. That will deplete the coffers even more and dent our any day fund for emergencies.