India's fiscal sector reforms `help to raise the rate of savings and investment in India. This further helps to enhance the productivity of public expenditures.
Components of India's Fiscal Sector Reforms
Some of the major components of India's fiscal sector reforms include expenditure reforms, tax reform measures, public sector restructuring and systematic reforms in government's borrowing process.
Economic Scenario: India
Over the last couple of decades, India has established itself as one of the fastest growing economies in the world. India is also advancing towards the economical growth and improvement in literacy.
During 1999-2000, India's domestic savings and investment was estimated to grow by 23 percent and Indian economy was expected to grow by 6.4% although the average growth rate declined to 6.0% in comparison to earlier year.
In the first five year plan (1951-1979), India had attained an average annual growth rate by 3.5% and during the 90's, Indian economy showed an average growth rate of 6.4%, which was 5.9% in the 80's. In the consecutive three Five Year Plans (2nd, 3rd and 4th ), India had experienced an increasing growth rate and eventually at the end of the 8th Five Year Plan, the annual growth rate of India reached 6.9 percent.
During the period from 1991-92 the Indian economy passed through a tough time, when almost every macroeconomic indicator showed poor performance. The overall economic growth in this period declined to 1.1% and the total fiscal deficit became 8% of the GDP( Gross Domestic Product).
The Government of India adopted various effective programs of structural reforms with an objective to encourage external trade, industrial policy and exchange rate.