It is not India but the wealthiest country of the world, the US, which is facing historical deficit budget (projected) for the financial year ending September’09. The next president is going to inherit a highest ever deficit in budget of $482 billion (excluding $80 billion war expenses in Iraq and Afghanistan). The earlier highest budgetary deficit was $413 billion in 2004.
However this represents merely 3% of American GDP and as per economic analysts the financial picture is not bad with 3% budgetary deficit.
While explaining the cause of such huge budget deficit in dollar term, a Bush administration official pointed out that 130 million American households were being paid a stimulus amount to support a sagging economy and to avoid a deep economic recession.
USA had a golden period of 10 years prior to 2002 when the economy expanded continually every year and even had budgetary surpluses for 4 consecutive years from 1998 to 2001. Bush inherited a surplus budget of $128 billion 2001 when he entered office.
Driven by the expectations of this surplus to continue in coming years, President Bush introduced a tax cut of $1.30 trillion over a period of 10 year in 2001. However that was a short-lived dream. The government expenditure started increasing for funding the war against terrorism and by 2004 the budget deficit reached the then highest ever of $413 billion.
What an irony of fate it is for Bush? From a record surplus in 2001 to a record deficit in 2009- in just 8 years!