This deterioration in the Indian fiscal position happened at an inopportune time when there was fiscal improvement the world over and India was trying to globalize. It is important to remember that India’s fiscal situation has been significantly divergent from the global fiscal situation and continues to be so even now.
I think, this is the background we have to keep in view whenever we discuss the pace and the content of economic reforms in India. The coming into force of the FRBM Act, 2003 on July 5, 2004, which established a framework for a rule based fiscal consolidation, should be viewed in this background.