Government Expenditure and Macroeconomic Parameters of India in Post Liberalisation Period

Sultan Singh

doi:10.47392/irjash.2020.266

Abstract

The active role of state through an increased level of government outlay has been key determinant of aggregate demand in India and thus led to enhanced growth rate coupled with active participation of private sector in 1990s. The sound macroeconomic parameters, albeit, with intermittent variation do profoundly tells success story of market friendly economic reforms vis a vis dynamic & effective state intervention through state sponsored market friendly measures to boost aggregate demand in post liberalisation period.

Highlights

The active role of state through an increased level of government outlay has been key determinant of aggregate demand in India and led to enhanced growth rate coupled with active participation of private sector in 1990s
According to the Keynesian economists, regime central government spending as a private sector decisions sometimes lead to incompetent macroeconomic outcomes requiring intervention by the government through fiscal & trade policy and the central bank via monetary policy to stabilize output. [1-6] The propagation of macroeconomics thoughts in general and profound acceptance of percentage of GDP was approximately 15 percent which observed sustained reduction in early 1990s and it reduced to 14 percent of GDP, a lowest level since new economic policy(See fig 1)
Central government expenditure in developing countries like India is relatively low compared to economically advanced countries like USA who spends more than 20 percentage of GDP denotes significant contribution of the state in aggregate demand

Summary

Component of Aggregate Demand in Open Economy

All kinds of government consumption and increase in the decade and 2125434 crore rupees in investment are considered as Government year 2017-18, a rise of multiple of seven during spending (see fig 1 & 2). Though, it can be sub- seventeen years(see table 1). The average growth categorized into various subheads on the basis of rate of government expenditure has been 21 different criterion but according to aggregate percent per annum during 1990s compared to demand perspective it is classified into 2000s whereas average growth rate has been 28 government final consumption expenditure percentage per annum during 2000-2010[10-13]

External Debt

State Govt

Import of goods and services

Findings

In post economic reform era government