Which one of the following best describes the 'Crowding Out Effect' in the context of fiscal policy?

“• Excessive borrowings by the Government to manage fiscal deficit lead to shrinkage of the liquidity in the market and force interest rates to go up. This leaves less availability of funds for the private sector. Therefore, investment suffers and growth decelerates. If the Government spends the borrowed funds in populist schemes as a revenue expenditure, it may lead to Crowding-out.”

“This is because if the government decides to borrow from the private citizens by issuing bonds to finance deficits, these bonds (which are risk free) will compete with corporate bonds and other financial instruments for the available supply of funds. If people decide to buy government bonds, the funds remaining to be invested in private sector will be less. Thus, some private/corporate borrowers will get "crowded out"(displaced) of the financial markets as the government claims an increasing share of the economy's total savings. Opposite of crowding out is "crowding in" where private investment increases as debt financed government spending increases.”

“Amidst the COVID-19 pandemic crisis, there was a serious debate regarding the public finance concerning debt sustainability, sovereign ratings, etc. In this scenario, fiscal policy must be counter-cyclical to smooth out economic cycles instead of exacerbating them. In simple terms, under this phenomenon, the Government makes excess expenditure during recession and adopts a tighter fiscal policy during economic boom. In countries like India, greater public expenditure and job creation are paramount in economic recession. On the other hand, during economic boom, the Government must restrain itself from excessive public expenditure to prevent the crowding-out effect detrimental to private investments. During Ancient and Medieval times, the kings used to build monuments during famines and droughts in order to generate employment.”