Macroeconomic Adjustment in India:Policy and Performance in the Recent Years

In this paper, an attempt is made to describe the macroeconomic scenario and the policy developments of the Indian economy at a time when the policy framework is changing in the direction of market-oriented reforms. This paper tries to analyse the analytical framework underlying the current economic changes and provides a critical assessment of the reform process. First, the theoretical framework of the IMF and the WB underlying the currently underway macro adjustment policies is examined. Second, an analysis of the performance of macroeconomic policies is made by looking at various macroeconomic indicators such as inflation, fiscal gap and a critical balance-of-payments position. This is done by providing evidence through macroeconomic statistics. This paper identities the limitations of the analytic framework developed by the Fund and the Bank on the one hand and of the heuristic explanations based on comparing the trend in one macroeconomic variable with trend in another.