Have the Monetary and Fiscal Policies been Effective in India?

This paper analyzes the impact of fiscal and monetary policies on output in India.The econometric evidence suggests that less than 5 per cent of the variation in output is explained by fiscal and monetary policies before the crisis in 1991. However, post-crisis data reveals the growing importance of both the macro-economic policies in explaining output variation. The paper discusses theoretical arguments, surveys prior studies and attempts to explain the reasons for the empirical results.