li  inan e in ndia     18.21
     and the WB about the unsustainability of the                              force cut could be completed on the
     fiscal deficits. It was at the behest of the IMF that                     borders, etc.;
     India started the politically and socially painful                   (e) Budgetary supports to the loss-
     process of fiscal reforms, a step towards fiscal                          making PSUs to be an exception than
     consolidation.50 A number of steps were taken by                          a rule;
     the government at the Centre in this direction and
                                                                           (f) Expenditure reform started by the
     there had been incessant attempts to do the same
                                                                               governments in different areas and
     in the states’ public finances too. Major highlights
     in this direction can be summed up as given
     below:                                                               (g) General Services to be motivated
       1. Policy initiatives towards cutting revenue                           towards profit with subsidised services
            deficits:                                                          to the needy only (railways, power,
                                                                               water, etc.);
           (i) Cutting down expenditure—
                 (a) Cutting down the burden of salaries,                 (h) Postal deficits to be checked by
                     pensions and the PFs (down-sizing/                        involving the post offices in other
                     right-sizing of the government, out                       areas of profit;
                     of every 3 vacancies 1 to be filled                       (i) Higher education declared as non-
                     up, interest cut on the PF, pension                       priority sector; fees of institutions of
                     reforms-PFRDA, etc.);                                     professional courses revised upward;
                (b) Cutting         down       the     subsidies               etc.
                     (Administered Price Mechanism in                (ii) Increasing revenue receipts:
                     petroleum, fertilizers, sugar, drugs                 (a) Tax reforms initiated (Cenvat, VAT,
                     to be rationalised, it was done with                      Service Tax, GST proposed, etc.);
                     mixed successes);
                                                                          (b) The PSUs to be disinvested and even
                 (c) Interest burden to be cut down (by                        privatised (if a political concensus
                     going for lesser and lesser borrowings,                   reached which alludes today);
                     pre-payment of external debts, debt
                                                                          (c) Surplus forex reserves to be used in
                     swaps, promoting external lending,
                     minimal dependence on costlier                            external lending and purchasing
                     external borrowings, etc.);                               foreign high quality sovereign bonds,
                (d) Defence being one major item of the
                     expenditure bilateral negotiations                   (d) State governments allowed to go
                     initiated with China and Pakistan                         for market borrowing for their plan
                     (the historical and psychological                         expenditure, etc.
                     enemies against whom the Indian               2. The borrowing programme of the
                     defence preparedness was directed                 government:
                     to, as supposed) so that the defence             (i) The Ways and Means Advances (WMA)
       50.         imposed some macro economic conditions on              scheme commenced in 1997 under which
              the economy while India borrowed from it for its BoP        the government commits to the RBI about
              correction in 1990–91. One among the conditions             the amount of money it will give as part
              was cutting down the government expenditure (i.e.,
              salaries, pensions, interest and subsidies, etc.) by        of its market-borrowing programme, to
              10 per cent every year.                                     bring transparency in public expenditure