Fiscal deficit is necessarily inflationary in …

The difference between total revenue and total expenditure of the government is termed as fiscal deficit. It indicates the total borrowings needed by the government.

When the money that the Government had borrowed was used to increase production, then the inflation could be avoided.

Example: When borrowed money is used to build an irrigation system for farmers, then this would boost the agricultural production and would meet the demand for economy and henceforth control inflation.

But when government is spending money on unproductive programmes which do not increase economic productivity, then that paves the way for inflation.

Example: any scheme launched by the government but due to corruption or middlemen the programmes of the schemes are not implemented well and not reached to the beneficiaries. This would impact the economy and raises inflation.