Presented by the Finance Minister, the economic survey is basically what the Govt wants to do over the next few years, not just in the forthcoming Budget but in the ensuing months. Usually, the survey is dull and drab and is mumbo jumbo of figures of revenues and expenses of the fiscal, but this Economic Survey is path breaking in the sense that it is more like a wish list of what to expect in the Budget.
THE ROAD MAP AHEAD:
ABOUT ECONOMICS…
1. GDP maintained at.7% in FY10
2 Ample liquidity to fuel next inflationary cycle
3 Roll back excess liquidity once growth picks up – clear signal of rates going up
4 Passage of Pension Regulatory bill
5 Zero Fiscal deficit on cyclical adjusted basis
FDI
1. 100% FDI in healthcare, weather insurance
2. Insurance FDI to be raised to 49%
3. FDI in defence production to 49%
4. Permit FDI in multi-format retail starting with food
PATH BREAKING MOVES….
1. Decontrol sugar and fertiliser
2. End Govt monopoly in railways, coal and nuclear energy
3. Lift price controls on all drugs, except essentials
4. Lift all bans on future contracts to restore price discovery
DISINVESTMENT…
1. Disinvestment - 5-10% in profitable non-navratnas
2. Auction loss making PSU
3. Aim – Rs.25,000 crore per annum from disinvestment
4. List unlisted PSUs , offload at least 10% equity
5. In loss making PSUs where net worth is zero, allow negative bidding in the form of debt-write off
TAXATION….
1. Introduce new income tax code
2. Rationalise dividend distribution tax to do away with double taxation
3. Review customs duty exemptions
4. Phase out cesses, surcharges and transaction taxes - commodities transaction tax, securities transaction tax and Fringe Benefit Tax
SUBSIDY…
. 1. Provide fertiliser subsidy directly to farmer
2. Limit LPG subsidy to 6-8 cylinder per consumer per year
3. Cut oil, fertiliser, food subsidy leakages
4. Convert producer subsidies into direct consumer subsidies
5. Kerosene subsidy to non-electrified/ non-LPG homes
Too many things in the economic survey appear more like wishful thinking than something which can be implemented. It would require a gargantuan amount of legislations and implementation mechanisms. The intent is good but does not seem feasible, especially when it comes to subsidies. How will the Govt ensure that fertiliser subsidy go to the farmer directly? How will the Govt know which home has no electricity or LPG to give them kerosene subsidy.