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This is a Pizza.
Let's assume that Pizza represents the amount of credit banks and all other financial institutions can lend to people and corporations in a given financial year. Now comes the government which also asks some credit. Obviously, no one will say "NO" when government asks for credit since repayment is guaranteed by the executive itself. And when they ask for credit they are not asking peanuts, they are asking for a huge chunk of that Pizza.
Now the banks and other financial institutions in the country have to contend with new reality. Since the government has borrowed a huge chunk of credit meant for people, corporations, and industry, they have to be careful so to not stretch their balance sheets too much. At some point in the year entire Pizza(credit) will be lent to people and corporations. You can't put up a board outside the bank like "Houseful no more credit can be given". Instead you raise interest rates right when Government decides to borrow money from the market. Rate increase depends on how much money Government has borrowed from the market. The lesser the amount lesser the increase in interest rates.
By increasing the interest rates the financial institutions can still lend money to people and corporations even after the entire Pizza is consumed. Since there is more money in the hands of the people a.k.a market than intended, inflation would start to rise. It will increase even more rapidly if the loans taken are not put to good use like increase in production of goods and services.
If the tax payers in the country can understand this simple concept, then they won't be disappointed after every budget session. Low taxes --> High inflation. High taxes --> Low inflation. You either pay taxes to the government or pay more interest to the bank in EMI's. The later will bite you for many years to come. Ofcourse, the above scenario can be eliminated if GoI can increase tax base and bridge the revenue deficit. Or they can cut spending and balance the budget. This might include less subsidies, firing large section of government employees, giving less pensions to government employees, less investment in infrastructure, less military spending etc.
In the end you cannot make everyone happy with a budget.
