Fiscal Reforms in India

Fiscal Policy assumes a central place in the overall macroeconomic framework. As government sector and private sector compete for resources and for consumption in the economy, fiscal policy needs to be designed in a framework where an increase in government activity would result in net gains to the economy even when it may negatively impact in private sector activity, or reduce foreign exchange reserves or increase the monetary base. The specific objectives of the research are as to addresses the vital area of reforms, viz. fiscal reforms, to evaluate the impact of fiscal reforms on the public finances of the Union and state governments to analyze the outcome of the different tax measures and public expenditure, .to form a view of the effectiveness of fiscal reforms. Fiscal reforms have initiated a right kind of approach to maintain fiscal discipline in the Indian economy and the Indian economy has met it successfully at the national level however there has been some problems at the state level. Fiscal reforms have brought a new vision and mission for the government both central and state towards competitiveness and efficient mode for managing the economy The research work has analyzed the work of specialized institutions/ organizations of the govt. of India and RBI. The data are mostly sourced from budget documents of govt. of India , articles on central govt. finance published by RBI, finance accounts of govt. of India, handbook of statistics on the Indian economy published by RBI Compared the performance of the fiscal variables in the post reform decade to the extent possible subject of availability of data & put them in simple tabular form The policy simulation results revealed that fiscal deficit, in general, resulted in widening the current account deficit if it is moneyfinanced. In this case, the price and income effects reinforce each other, leading to the deterioration in the external balance both in the short-run and in the long-run. Thus, the recourse to deficit financing to promote public investment and growth involves a loss of control on inflation The study will have an important implication in development programmes and public policies Key –Words:Fiscal reform, Critical study, Indian economy, Fiscal discipline,Govt. policies