Can HRs improve compensation after appraisal if the employee conveys that he expects a better package? Given that the employee good the best rating just the his current overall package is in the average range and not the best although he gets a good rating.

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Don't think this is generally possible without business approval

You should apply for other jobs and get an offer which is as per your expectations. Then if you want to stay back in you company, you will get an opportunity to negotiate with your HR to match that ctc.

Look for a new job, which values you !
Maangne se sirf bhik milta hai, haak chinnke lo.

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