GENDER IMPLICATIONS OF NEW ECONOMIC POLICIES 41 paradigm of growth can be traced to the eighties. But the balance of payments crisis of 1991 was the decisive turning point pushing the economy onto a trajectory diametrically opposite to the import substitution path that had been followed so far. The economic policies consist of both stabilisation measures and of the structural adjustment package (SAP), Stabilisation policies are basically contractionary in nature, aimed at squeezing the overall demand mthin Ihe system, so a& to reduce imbalances in the external balance of payments and overall budgetary deficit in the short term. In the medium term it is expected to curb inflationary pressures. Curtailment of government expenditure, exchange rate reforms and tight monetary policy are the instruments employed to meet these objectives. Unlike the stabilisation programme which is of short duration in nature, the structural adjustment programme is a long run process aimed at a fundamental restructuring of the Indian economy. The package consists of policies to increase the outward orientation of the economy, reduce the role of the public sector and liberalise various sectors to make them more responsive to the markets, especially international market signals. The resultant inflows of foreign investment funds and increase in productivity and of efficiency are expected to push the economy onto a higher trajectory of growth. Since 1991 various stabilisation measures and elements of the structural adjustment programme have been implemented. It is very difficult in the real to separate the effects of the different instruments being employed. Yet one could say that while the structural adjustment programme is still unfolding, the impact of the stabilisation measures is very much evident. II The reduction in fiscal deficit from 8.4 per cent in 1990-91 to 5 per cent in 1992-93 was mainly achieved through compressing government expenditure. Growth in government expenditure sharply decelerated. While it is true that much wasteful expenditure can and should be pruned, the government made the adjustment primarily in two areas— public investment and social sectors. Infrastructure development has been affected most adversely. The implications for overall investment in the economy are especially worrisome as it has been established beyond doubt that in India private investment follows public investment. The prospects for economic growth appear rather dismal if fiscal discipline continues to be mainly based on investment cutting. The most alarming feature of the current economic trends have been the declaration in domestic capital formation. Restrictive monetary policies have been put into place to curtail money supply. In addition, severe compression of imports was carried