by CT Nilesh

A survey of the country’s economy demands less nationalization and the privatization of oil and energy, fewer barriers to foreign capital, less tax. But the state has a heavy fiscal deficit and is plagued by the scourge of populism and regionalism.

Mumbai (AsiaNews) The budget that will be presented today in parliament, is expected to balance between social orientation and growth; as well as fiscal prudence. Greater allocation to infrastructures, healthcare and education spending is likely to continue. Considering the large capital requirements going forward, opening up of several sectors to attract FDI / FII investment can be expected.

The national economic survey that the news papers published one week before the budget is demanding a vision of “three Ds”: decontrol, denationalize and disinvest. These are the requests and the hopes. But looking at the railway budget already presented in parliament the danger of populism and regionalism had not been avoided. One third of the provisions in the railway budget are in favor of West Bengal, the state of Mamata Banerjee, the railway minister.

What the economists are desiring is spelled out by the Economic Survey ’09:

-          Disinvest at least 10% of the unlisted PSUs, auction unrevivable loss-making ones, raise minimum Rs 25kcr/year through sale

-          Decontrol petro product prices, phase out subsidy on kerosene, limit cooking gas subsidy to 6-8 cylinders per household per annum

-          Do away with  government OK for retrenching workers in big units while increasing compensation, allow contract labour in non-core work

-          Hike foreign equity capital in insurance and defence production to 49%, with 100% in special categories

-          Allow private entry and 49% FDI in nuclear power

-          Denationalize coal, sell old oilfields to private sector, make power supply competitive by allowing open access

-          Allow FDI in multi-format retail, starting with food

-          Decontrol sugar & fertilizers, switch producer subsidies to consumer subsides

These are only few of the suggestions of the Economic Survey.

We anticipate the Finance Minister to indicate a clear way ahead that will lead to sustainable economic growth. The fiscal deficit is cause for concern and should be reigned in. While the Union Budget 2009 might appear to have several disappointments, it is expected to be a healthy one for the long term.

Cement Uniform excise duty should be levied on cement. Some changes have already been undertaken during last year and we expect the government to maintain status quo on other factors.

Monetary and fiscal measures taken so far to beat the slowdown could trigger high inflation. The survey makes a welcome pitch for big-ticket reforms to improve the investment climate.

The finance minister will want to boost social spending but that mandates fund-raising. He may provide tax sops; yet he must tackle thinning tax collections and fiscal deficit is already a problem. The fuel prices had already been increased last week and people may face high food prices.

The Survey suggested phasing out some taxes like the Commodity Transaction Tax (STT) and the Fringe Benefit Tax (FBT), which industry too has been demanding for quite sometime.

• india
• economy
• budgest
• privitisation
• tax
• employment