The UPA is likely to unveil new reform measures, sweetened with a few populist moves, over the next few weeks. The cabinet, headed by Prime Minister Manmohan Singh, is expected to approve some of these measures on Friday.
Sources told HT that the measures might include replacing the income tax laws with the direct taxes code, which, among other things, would raise the tax exemption limit from Rs. 2 lakh a year.
The new round of booster shots are not likely to trigger howls of protest that rocked the government when it allowed FDI in the retail and aviation sectors and hiked the prices of diesel and cooking gas last week.
The government may follow the panel headed by former finance secretary Vijay Kelkar, which recommended steps to cut public expenditure to rein in the widening fiscal deficit and selling government equity in public sector companies.
What’s more, a national investment board, headed by the PM, is likely to fast-track infrastructure projects, such as expressways, ports and railways soon, on the lines of finance minister P Chidambaram’s views aired in the full planning commission meeting last week.
Besides, the UPA is likely to build consensus on the goods and services tax (GST) that will alter the indirect tax structure by replacing levies with a single tax each for goods and services. The government may concede more fiscal powers to states for rolling out the GST.
A package is also likely for power companies to restructure bank debts worth more than R2 lakh crore. Besides controversial tax measures, such as the retrospective taxation of corporate deals and General Anti-Avoidance Rules (GAAR), will also be clarified.
In another reform measure to deepen the capital markets and attract retail investors, the government is set to notify norms for the Rajiv Gandhi Equity Savings Scheme (RGESS) shortly.