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In a federal systemthis term refers to the problem that provinces encounter when the growing cost...

In a federal systemthis term refers to the problem that provinces encounter when the growing cost of providing public services outstrips limited provincial tax revenues:
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In a federal system of government,means that the power is divided between centre and the states. If the expenditure of providing public services outstrips the limited tax revenue then that implies that the government is facing the situation of budget deficit, meaning that expenditure of the government is more than it's income. So in this case the government has to look for ways to finance this budget-deficit like borrowing money, issuing govt bonds etc. It also reflects the financial health of the government and indicates the extent to which it needs to borrow. But if the budget-deficit continues for a prolonged period of time,it can lead to a situation of debt-trap for the government,where the amount of debt on previous loans would be so high that the government has to borrow afresh to pay off those debts.

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