The public expenditure management is a challenge to the Government of India in the context of budget making during the post-liberalization period. Clarify it.
Public Expenditure Management (PEM), which involves managing government spending effectively, became significantly more challenging in the post-liberalization era. The shift from a state-led economy to a market-oriented one fundamentally altered the nature and expectations of government spending.
First, the government's role changed from being the primary engine of growth to a facilitator. This meant a shift in expenditure from running public sector enterprises to investing in social sectors like health and education, and physical infrastructure. Managing the quality and outcome of this spending is far more complex than simply allocating funds.
Second, opening the economy brought intense pressure for fiscal discipline. Global financial markets and credit rating agencies closely scrutinize India's fiscal deficit. This has forced the government to adopt frameworks like the Fiscal Responsibility and Budget Management (FRBM) Act, creating a constant tightrope walk between stimulating growth and maintaining fiscal health.
Third, the burden of subsidies, particularly on food, fertilizers, and fuel, became a major fiscal challenge. While politically sensitive and crucial for welfare, these subsidies drain a significant portion of revenue, crowding out productive capital expenditure. Rationalizing them without causing public backlash is a persistent challenge.
Finally, while the economic model changed, old issues of leakages and corruption in spending remained. Ensuring that every rupee spent reaches its intended beneficiary is a massive task. Therefore, post-liberalization PEM is a complex balancing act between new global pressures, legacy subsidy burdens, and the growing developmental aspirations of the people.
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Sakshi Negi
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Important Questions from GS3
Examine the pattern and trend of public expenditure on social services in the post-reforms period in India. To what extent this has been in consonance with achieving the objective of inclusive growth?
What are the causes of persistent high food inflation in India? Comment on the effectiveness of the monetary policy of the RBI to control this type of inflation.
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What is the present world scenario of intellectual property rights with respect to life materials? Although, India is second in the world to file patents, still only a few have been commercialized. Explain the reasons behind this less commercialization.
What were the factors responsible for the successful implementation of land reforms in some parts of the country? Elaborate.
