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Macroeconomic Developments

In: Investing in India

Author

Listed:
  • Shanta Acharya

Abstract

The major challenge for India’s planners remains the management of the fiscal deficit as it is crucial to sustaining higher growth. The structural adjustment programme initiated in 1991 was to address that issue. Unfortunately, the rise in the fiscal deficit in 1993–94 did not inspire confidence in the ability or the willingness of the government to manage the fiscal situation efficiently. While there is no risk of reforms being reversed, the rule of populism and the decline in the quality of expenditure management mean that reforms continue at a pace slower than warranted. However, the downward trend in the fiscal deficit since 1993–94 has been encouraging. If the deficit is maintained below the 5 per cent level of GDP with higher public spending on infrastructure and the social sectors, India could sustain higher growth and investor confidence.

Suggested Citation

  • Shanta Acharya, 1998. "Macroeconomic Developments," Palgrave Macmillan Books, in: Investing in India, chapter 3, pages 71-134, Palgrave Macmillan.
  • Handle: RePEc:pal:palchp:978-0-230-37107-1_3
    DOI: 10.1057/9780230371071_3
    as

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