Capital outlays continued to bear the burden of fiscal adjustment, with the ratio of capital outlays to GDP reaching their lowest levels during the period 1997-98 to 2002-03, both at the Central and State levels.
Reflecting the worsening of the fiscal situation, the public sector savings rate deteriorated in the second half of the 1990s, culminating into unprecedented dissavings during the period 1998-99 to 2002-03. This also pulled down the aggregate saving and investment rates in the economy.