This paper examines various areas of India´s fiscal policy, in particular fiscal discipline and management, structure of government spending, tax system and fiscal federalism. It reviews reforms carried out several past two decades which, as part of the overall economic reform agenda, helped lifting Indian economy to a higher growth path. It also reviews where more reforms are desirable to further reduce economic distortions and improve provision of public services. It notes that after high fiscal deficits have often been recorded during the past two decades, following adoption of the ‘Fiscal Responsibility and Budget Management Act (FRBM)’ in 2003, fiscal discipline has improved significantly. As to government spending, it finds that, given large share of subsidy for commercial undertakings, agriculture and food distribution, there is considerable scope to improve quality of spending and focus on improving infrastructure and reducing poverty levels. It also comments on tax system which has undergone many reforms since start of 1990s when reform process began.
Fiscal policy, government spending, taxation, India
