Fairy tales and fables in Sanskrit literature are the first-ever luminous instances in ancient Indian literature, that still hold their legendary admirability for Indians of all generations. Borrowing the central theme of `neverland` or the element of `fantasia` to some extent from the western countries, the Indianised version of fables and fairy tales liberally instilled their dose of the mystical and unimaginable in the ancient Sanskrit language. Sanskrit literature, meanwhile also had begun influencing the Persian fairy tales and folklores, with their prolific bunch of highly unearthly characters like gorgons, demons, specters, lifetime curses, hidden palaces laden with gold, the animal world gifted with Godly powers and being able to talk like humans and the likes. In fact, such was their appeal that they have been translated into umpteen regional languages in India, still bringing pots of money for publishers, with happy-happy readers.

Sanskrit literature was perhaps the first instance in ancient Indian literary scenario, which was initiatory to introduce fairy-tales and the concept of fables to Indian populace, much like its European counterpart in Greek literature. Sanskrit fairy tales and fables bear their chief characteristics of serving as `ethical reflections and proverbial philosophy`. These collections of parables possessed its individualistic style, marked by the introduction of a number of different stories within the outline of a single narrative. And this individualistic style successfully made its way to Persian and Arabic literatures, wielding a decisive influence upon works like One Thousand and One Nights (also admired as the Arabian Nights).

The two most important collections within this fairy-tale Sanskritic literature framework are Panchatantra and Hitopadesha. During its initiation, they were strictly designated as manuals to instruct the kings in domestic and foreign policies. Panchatantra and Hitopadesha belong to that class of literature which the Hindus refer to as niti-sastra, or "Science of Political Ethics".

Other noteworthy prose works in Sanskrit literature comprise a collection of pretty and nifty fairy tales, inclined towards being touted as doused with much of Oriental emblazoning. The Vetala-panchavimsati or "Twenty-five Tales of the Vet?la" (a demon reckoned to possess corpses), the Simhasana-dvatrimcika or "Thirty-two Stories of the Lion-seat" (i.e. throne), which also are also much popular by the name of Vikrama-charita, or "Adventures of Vikrama" and the ?uka-saptati, or "Seventy Stories of a Parrot" absolutely fall under this category. These three compilations of fairy tales have all been penned in prose and are relatively short as compared to other scholarly treatises in Sanskrit literary works. Somadeva`s Katha-sarit-sagara or "Ocean of Rivers of Stories" commands attention of special importance, having been authored in verse and also maintaining an equal substantial size. The Sanskritic fable comprises more than 22,000 shlokas, corresponding to nearly one-fourth of the Mahabharata.

Fable collections, initially functioning as the handbooks of `practical moral philosophy`, rendered a luxuriant resource of ethical dictums, that become so popular, that works comprising exclusively poetical aphorisms began to flood the literary domain. The most important amongst this bunch of Sanskrit literature are the two collections by the exceedingly-talented Bhartrhari, titled respectively N?ti?ataka, or "Century of Conduct," and Vairagya-?ataka, translated into English as "Century of Renunciation". The principal and persisting theme in these works and in the new ethical poetry style, is the doctrine of vanity of human life, which had germinated before the ascension of Buddhism during the sixth century B.C., and has since, reigned over Indian thought process.