Who among the following, first mooted the idea of deficit financing ?

The idea of deficit financing was first mooted by John Maynard Keynes. During the Great Depression of 1929, Keynes challenged the classical economic view that free markets automatically ensure full employment. He argued that during economic slumps, inadequate private investment and over-saving lead to unemployment. To resolve this, Keynes proposed that the government should replace missing private investment with public investment financed by deliberate deficits. This practice, known as deficit spending, involves the government borrowing money to fund public works, thereby creating jobs and increasing purchasing power. Keynesian economics justifies this interventionist approach through countercyclical fiscal policies, where unbalanced budgets are used as a tool to stabilize the economy and reduce the amplitude of business cycles. While classical economists like Adam Smith favored balanced budgets, Keynes's 'General Theory' (1936) revolutionized the role of government debt in economic management.

Sources

1. [1] Macroeconomics (NCERT class XII 2025 ed.) > Chapter 1: Introduction > John Maynard Keynes > p. 5
2. [2] https://en.wikipedia.org/wiki/Deficit_spending
3. [3] https://www.imf.org/external/pubs/ft/fandd/2014/09/basics.htm