Fiscal management and economic growth of India during global crises period
Dr. Khandare VB, Dean
This paper investigates the relationship between public sector financial management and economic growth in India during global crisis period. The main objectives of this paper are: To study the role of India’s fiscal management policy in economic growth during global crisis period, to examine the impact of fiscal stimulus packages on India’s fiscal management during global crisis period and to examine the effectiveness of fiscal management policy measures taken by Indian government to counter the effects of global crisis on Indian economy. It is found that the GDP growth in India shows continuously rising trends during 2004-05 to 2006-07 i.e. 7.5 percent in 2004-05 which goes up to 9.7 percent in 2006-07, during globalization period it goes down 9.3 percent in 2007-08 and 6.7 percent in 2008-09. It means India's economy is affected by Global financial crisis since mid of 2007. The fiscal policy measures had taken by government to counter the effect of global economic slowdown on the Indian economy. Fiscal policy of 2008-09 cuts the excise duty, customs duty and service tax to increase the demand for industrial goods. Due to these measures India’s GDP growth increases from 6.8 percent of 2008-09 to 7.74 in 2009-10 and 8 percent in 2010-11. India’s Fiscal Deficit was 4.5 percent in 2003-04 which goes down at lowest 2.5 percent in 2007-08. After global crisis period the fiscal stimulus packages of expenditure and tax cuts during global crisis period fiscal deficit increased from 2.5 percent of GDP in 2007-08 to 6.3 percent in 2009-10. The fiscal policy of 2011-12 will continue to be guided by the principles of gradual adjustment from the fiscal expansion undertaken during the global crisis period in 2008-09 and 2009-10. It may be seen that the fiscal deficit is estimated at 5.1 percent and 4.6 percent of GDP as against 5.7 percent and 4.8 percent in 2010-11 and 2011-12 respectively.