Finances of the Government of India

The fiscal situation of the Central Government of India has worsened since the eighties. In the latter half of the eighties the fiscal and revenue deficits were in the range 7-8 and 2-3 per cent of GDP respectively. Fiscal consolidation was hence a major focus of the reform process introduced in 1991-92. The nineties have seen varied performance on the deficit indicators. The first half of nineties witnessed a decline in the deficits as a percentage of GDP. However, the latter half of the nineties and the early 2000s saw a reversal of this trend and the major deficit indicators climbed back to near-about their early 1990-91 levels. Post FRBM Act, the fiscal status of India improved. The Central Government finances once again came under stress during 2008-09, owing to the global financial crisis. This book is an attempt to examine the trends of central finances along with the deficits. The effect of 1991-reforms and FRBM Act on deficits was short lived. An empirical analysis of the factors responsible for the widening deficits and the fiscal reform measures to identify the causes has been undertaken.