The Challenge of Fiscal Reform in India

This paper argues that the growth performance of the Indian economy, while
commendable by the standards of the pre reform period, is not adequate to rid India of the
bane of poverty in a short enough time period. Two reasons are identified for this
inadequate growth performance viz., low rate of savings and investment and poor
productivity of public sector investments. The paper then discusses the design of fiscal
policy to help raise the rate of saving and investment and improve the productivity of
public expenditures.