The public expenditure management is a challenge to the Government of India in context of budget making during the post liberalization period. Clarify it. (Answer in 250 words)

Post-liberalisation budgeting must reconcile fiscal discipline with developmental spending, welfare commitments, infrastructure needs and counter-cyclical management.

Core challenges

• Rigid committed expenditure—interest, salaries, pensions and subsidies—reduces fiscal space for capital investment.
• Revenue volatility, tax competition, contingent liabilities and off-budget borrowing complicate medium-term planning.
• Fragmented schemes, weak outcome measurement and delays in releases reduce value for money.
• Public–private partnerships, guarantees and stressed public enterprises create fiscal risks.
• Subsidies may be poorly targeted, while under-spending in health, education and research harms long-term productivity.
• Fiscal federalism requires balancing national priorities with State autonomy and Finance Commission norms.

Reforms

Adopt medium-term expenditure frameworks, zero-based review of schemes, outcome budgets, transparent fiscal-risk statements and independent evaluation. Improve tax administration, direct benefit transfers, procurement, asset monetisation and public investment quality.

Conclusion

Sound expenditure management is not mere austerity; it reallocates scarce resources from low-value spending to inclusive, productive and sustainable public goods.

Post-liberalisation reforms also increased the role of markets and private investment, but the State remains responsible for merit goods and redistribution. Fiscal rules must therefore be accompanied by credible escape clauses for crises, transparent subsidies and robust parliamentary scrutiny. Better tax compliance, expenditure switching from revenue to capital spending and independent fiscal-risk assessment can improve the quality of public finance without undermining social protection.

public expenditure; fiscal responsibility; outcome budgeting; fiscal federalism