E-Paper
Economic Survey endorses Kelkar report on tax reforms
The Economic Survey 2002-03 has endorsed Kelkar Panel recommendations on tax reforms besides suggesting a cut in subsidies and interest rates to deal with mounting and worrying fiscal deficit.
Lowering the growth projection for the current year to 4.4 per cent, the Economic Survey 2002-03 has endorsed Kelkar Panel recommendations on tax reforms besides suggesting a cut in subsidies and interest rates to deal with mounting and worrying fiscal deficit.
Setting the reform agenda for the Budget, the Survey has singled out deteriorating fiscal situation as a "major challenge" and listed labour reforms, disinvestment, overhauling of regulatory regime including agriculture, and removal of infrastructural bottlenecks as other priority areas to achieve robust eight per cent growth during the 10th Plan period.
The Survey also moots a two-pronged strategy of augmenting revenues and restraining expenditure for fiscal consolidation. It says modernisation of tax administration, broadening the base and restricting the exemptions are needed to improve revenue collections, essential for fiscal consolidation.
The Survey says revenues from recovery of user charges have to be tapped besides phasing out tax exemptions and plugging evasions.
Though it gives no growth projections for the next financial year, its says that growth recovery is already visible. However, without fiscal consolidation, there is a risk that the pre-emption of resources by the government will crowd out the nascent recovery in private investment.
Highlights
Economic growth scaled down to 4.4 per cent in 2002-03 from 5.6 per cent a year ago.
Significant decline in agricultural growth by 3.1 per cent from 5.7 per cent mainly due to monsoon failure.
Improvement in industrial production to 6.1 per cent in current fiscal from 3.3 per cent a year ago.
Fiscal deficit expected to be at the target level of 5.3 per cent of GDP in 2002-03 as against 5.9 per cent a year ago.
Exports grow by 20.4 per cent (April-December 2002) over the corresponding previous period.
Services sector to grow at 7.1 per cent in the current fiscal from 6.8 per cent in 2001-02.
Gross domestic savings rose modestly to 24 per cent of GDP in 2001-02 from 23.4 per cent in 2000-01.
Public sector savings continued to slide by 2.5 per cent whereas in private sector it improved strongly by 26.5 per cent in the same period.
FoodgrainFoodgrain production declined by 13.6 per cent (provisional) during 2002-03 as compared to a healthy growth of 6.3 per cent in the corresponding previous period.
Inflation rate expected to go up to 4.4 per cent compared to 2.6 per cent (52-week average in 2002).
