Introduction and Overview

India has experienced a significant growth in public spending at both the central and sub-national levels of government caused by the extensive and increased use of fiscal instruments in the sectoral development strategies adopted by the government ever since India attained independence. There have also been significant changes in governmental priorities from time to time bringing about considerable changes in the nature of public spending. The country has seen major fiscal policy changes with the introduction of structural adjustment programmes and stabilization measures. The framing of legislation like ‘Fiscal Responsibility and Budget Management’ (FRBM) to effect rule-based fiscal corrections has led the governments at both the centre and state levels to adopt fiscal consolidation by imposing a ceiling on the fiscal and revenue deficits and the public debt in a time-bound manner. The fiscal map of the country is going through major changes with the scrapping of the ‘plan’ and ‘non-plan’ categorization of expenditure. These sharp changes in the quantum and quality of public spending have great implications for the development outcomes in the country. While there are issues of effective translation of outlays into outcomes, there are also issues of allocative efficiency, in terms of whether public spending in the country is reflecting the impending needs of the society, which are highly diverse given the country’s differential levels of development. An overview of the book comprising over a five-decade analysis of trends in public expenditure by central and sub-national governments; effectiveness of public expenditure control; features of effective public expenditure reform, Covid-19 and fiscal measures and the way forward to enhance effectiveness of public expenditure in India is presented in this chapter.