The government’s pre-budget economic survey has recommended radical policy changes including foreign investment in multi-brand retail, increasing work hours for factory workers and allowing overseas institutions in higher education.
<b1>The survey, which predicted the economy to grow 7 per cent this fiscal year, also pushed for abolishing fringe benefit tax (FBT), surcharges and cesses. It also set a Rs 25,000 crore annual revenue target by divesting government equity in public sector undertakings.
But question marks hang over how many of these recommendations could fructify as a persisting global economic crisis, political compulsions and a shaky monsoon at home loom in the backdrop.
In the past similar recommendations have not always found reflection in the budget. Allowing private participation in coal mining, FDI in retail, increasing workweek to 60 hours, and raising FDI limits in insurance to 49 per cent were also part of last year’s survey.
The government’s report card of the economy, tabled by Finance Minister Pranab Mukherjee, 73, in Parliament on Thursday, painted a bullish recovery of the economy to a high-growth trajectory if reforms were pursued vigorously.
“India should be back on the new trend growth path of 8.5 to 9 per cent per annum provided the critical policy and institutional bottlenecks are removed,” the survey said. “It is therefore imperative that the government revisit the agenda for pending economic reforms in the first instance with a view to renew the growth momentum.”
Mukherjee said the monsoon would be normal and with luck the country could surpass the GDP growth target of about 7 per cent. “I do hope there will be recovery and it will be possible to achieve the target,” he told reporters. “It may be, if luck favours, we will surpass (the GDP target).”
The survey also called for reforming the fertiliser and food subsidy regimes, and an auction of third-generation mobile phone spectrum that it said should be freely tradeable.
It also called for “greater urgency” in removing hurdles to investment in infrastructure by government and private sector.
“The economic survey which focuses on reforms is a positive move as financial sector reforms are crucial and they have to be done despite the global crisis,” ICRIER director Rajiv Kumar told Hindustan Times.
Federation of Indian Chambers of Commerce and Industry president Harshpati Singhania said the survey has offered a confident outlook for the Indian economy in 2009-10. “The government will have to provide stimulus packages to give further support to the recovery process.”