Economic Survey 2003-04: Highlights

Economic Survey 2003-04: Highlights

Outlining the roadmap to achieve seven-eight per cent economic growth on sustained basis, the Economic Survey 2003-04 indicated major initiatives in the Union Budget to overhaul tax system, slash deficit, contain prices and boost agriculture and industry.

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Sounding alarm bells on the mounting fiscal deficits of both the Centre and states at 10 per cent of GDP, the Survey, tabled in Parliament a day before presentation of Union Budget, said there is a clear need to overhaul the regime of tax exemptions, reduce the number of notifications, simplify procedures and move towards a paper-less and transparent administration anchored on trust.

Apart from fiscal consolidation and sustaining growth momentum, it listed other major challenges as boosting farm growth, expanding industry by 10 per cent and keeping inflation rate to about five per cent.

Warning that hardening global prices of oil and non-oil commodities could affect monetary conditions, it said with fiscal deficit and signs of credit pick-up, the possibility of interest rates moving northwards could not be ruled out.

To achieve higher 10 per cent industrial growth, the Survey said five constraints that needed to be tackled are: reservation for small scale industries, high customs tariff, rigidity in labour laws, reaping economies of scale, friction in creation and closure of firms and distortions in indirect tax structure.

The burgeoning foreign exchange reserves at $120 billion have provided flexibility to hasten trade reforms, it said stressing on liberalising FDI regime to make it an engine of growth as in China.

* Steps to be taken to achieve 7-8 per cent GDP growth
* Expanding industry fast, by at least 10 per cent
* Boosting agricultural growth through diversification
* Emphasis on agro-processing to achieve higher agri growth
* Effecting fiscal consolidation, eliminating revenue deficit
* Maintaining inflation at around five per cent
* Foreign exchange reserve at $119.3 bn as of May 31, 2004
* Combined fiscal deficit in 2003-04 at 9.4 per cent of GDP
* Indications of hardening of interest rates in near future
* No disinvestment in profit-making PSUs
* FII inflows up by 1635 per cent in 2003-04 over 2002-03
* Expresses concern over low teledensity and internet usage
* States get extension to unbundle SEBs
* Attract greater investment in infrastructure projects
* Design specific micro strategies for export growth
* Reformulate policy to tackle poverty
* Take steps for attaining 10 pc industrial growth
* Shift focus to corridor management in road construction
* States to cut down fiscal deficits
* Overhaul tax exemptions; Strict penalty to curb evasion
* Recommends broad-based agri-development programme
* Fee hike for higher education
* External debt jumps 6.47% to $112.13 bn till 2003