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The Finance Minister Shri P. Chidambaram held a meeting today with eminent economists as part of the pre-budget consultations with various interest groups. Welcoming the participants, the Finance Minister invited the economists to provide suggestions for the forthcoming budget.
The various suggestions offered by the economists are as follows:-
Tax revenue should be increased to one per cent of GDP for funding social expenditure.
A voucher system should be introduced for improving the quality of public spending in health.
Efforts should be made to increase tax revenue by improving compliance.
The issue of giving tax relief to NGOs should be revisited.
The framework for future economic reforms should focus primarily on competition, which is essential with the globalizing trends.
Achieving FRBM targets requires equal emphasis on expenditure reduction, particularly on ongoing projects and subsidies, along with revenue enhancement.
All independent regulators should be completely neutral towards the various regulated entities irrespective of their public or private ownership.
Financing of social services should be separated from their delivery.
All ongoing projects should be evaluated on a scientific basis.
A blueprint for a national VAT, involving partnership between the Centre and States, should be drawn up.
There should be a single uniform VAT rate.
The peak rate of customs duty should be reduced to 5 per cent over the next 4 years.
Nominal rates of personal income tax should be reduced.
Rules in Special Economic Zones (SEZs) should be simplified for reducing red tapism.
Capital account convertibility should be considered.
Profitability road map should be drawn up for 8 to 10 major crops.
Procurement prices can be lowered, if accompanied by appropriate tax, tariff and monetary policies.
Farmers Commissions should be set up and empowered.
Use of foreign exchange reserves, as a ‘comfort’ mechanism in infrastructure can trigger off positive multiplier effects.
Wages in the employment guarantee scheme should be lower than market rates.
Budgetary support should be given to attempts to build up energy resources.
A Blue Ribbon Commission should be set up for fresh assessment of poverty lines.
Overall investment should increase from 23 - 24 per cent of GDP to 28 - 29 per cent of GDP to sustain growth at 7-8 per cent per year.
There should be greater public investment in agriculture.
Small investors should be encouraged to invest in corporate sector by tightening regulations.
There should be efforts to generate employment at all levels of skills.
There should be greater coordination of the interface between State Budgets and various organs of the Central government as far as Central transfers are concerned.
The borrowing limits of states should be announced in the Central Budget.
Income tax rates should be reduced and tax exemptions removed.
Specific measures should be taken for skill development in the manufacturing sector.
Derivative trading should be allowed in commodities.
Insurance markets should be developed for improving productive channelisation of savings.
A fund for good governance should be set up in States.
Tax treatment for voluntary contributors to Employees Provident Fund (EPF) should be changed.
LPG subsidies should be restricted to the BPL people, holding IT-based vouchers, for ensuring actual transfer of resources to the poor.
CENVAT should be integrated with service tax.
A rural university should be set up in every agro-climatic region.
The meeting was attended by eminent economists and economic experts from various professional, educational and research institutes of the country, alongwith senior officials of the Ministry of Finance.
BSC/BY/GN-12/5
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