Economic Survey 2002-03 has recommended lowering of interest rates on small savings, promoting investments in capital markets and phasing out subsidies on cooking gas, kerosene and fertilisers.
However, when Finance Minister Jaswant Singh presents his maiden budget on Friday, taking that call won’t be easy, given the NDA’s electoral compulsions.
A hint of what could be unveiled in the budget lies in the annual Survey, the official report card on the state of the economy.
According to the Survey, the growth rate for the current financial year is forecast at 4.4 per cent, down from 5.6 per cent last year. It said the low growth in gross domestic product (GDP) was caused by a sharp decline in farm output caused by the drought.
Which is perhaps why the Survey focuses on taking reforms to the rural economy with emphasis on agriculture and allied industries. It highlights the Centre's strategy to tap the huge potential in horticulture, floriculture and sericulture products in both domestic and global markets.
Opening up water resources to private companies for conservation is a major policy shift.
On the brighter side, industrial growth is expected to be 6.1 per cent in the current fiscal year compared with 3.3 per cent growth last year.
The Survey also recommended a slew of measures to boost capital markets, privatisation of PSUs, further liberalisation of forex transactions and prepayment of the Centre's costly debt.
Apart from creating a unified rural market with free movement of foodgrains and products, the Survey suggests providing insurance cover to farmers. The Agriculture Insurance Company has already been set up for this purpose, and the sector may be opened up to private insurers.
Competition: Give flexibility to employers to hire and fire. De-reserve more products in small sector. Open more sectors of the economy to foreign players.
Interest rates: Should be lowered further. That could spell trouble for investors in the entire spectrum of savings instruments — postal savings, RBI bonds, PF, mutual funds
Trade: Further liberalise import regime, and lower customs duties. Focus more on services export, in which India has cost advantage. Means more outsourcing of work by MNCs
Capital markets: Allow buying and selling of shares on borrowed collateral. Make compulsory quoting of permanent account number (PAN) for all share transactions
Freebies: Phase out subsidies on kerosene, cooking gas. Lower them for urea and DAP. But continue with food subsidies for people below poverty line