The problems of the agriculture sector, which has been reeling under neglect for far too long, should be addressed on a priority basis in the forthcoming Budget in order to achieve 8 per cent growth in the next fiscal and tackle the problem of rising food inflation.
These views were articulated by all the speakers who participated in the Round Table on "Economic Predictions for 2010-11 and Expectations from the Budget" organised by the PHD Chamber in the capital.
There is an urgent need to augment investment in agriculture especially in irrigation, land reforms, R&D, availability of pre and post harvest technology, etc., so that the sector grows to 4 per cent of GDP. Indeed, it is important to be self-sufficient in food as imports are not an option.
Dr B B Bhattacharya, Vice Chancellor, JNU, said that our growth rates could go up from an average of 6 per cent to 9 per cent provided fiscal stimulus is retained as there would be no further allocations for debt waiver and 6th pay commission bonanza as in the previous year. The government would also have to address the problem of high inflation while striving to achieve a growth rate of 9 per cent.
Dr S Mundle, Emeritus Professor, National Institute of Public Finance and Policy, maintained that our economy could grow at 8 per cent in 2010-11 and 9 per cent in the subsequent year provided there are no further shocks, either domestic or global.
Our burgeoning fiscal deficit should be curtailed as every rupee increase in fiscal deficit adds to our public debt .The single largest expenditure of the government is that of interest payments which not only leaves fewer funds for private investment but also crowds out public investment in crucial areas such as infrastructure.
R Muralidharan, Executive Director, Price Waterhouse Coopers Ltd., said that the forthcoming Budget would be tough even if GST and DTC is shifted by a year. Industry is looking for simplicity and stability in taxes and moderate tax rates.
In the area of direct taxes, the Government could announce a roadmap on DTC. In indirect taxes, the announcements would be in alignment with GST. Hence, it is possible for the Finance Minister to raise excise duty to 10 per cent and make it at par with GST.
Service tax rate may be left unchanged even while enlarging the base by adding more services in the tax net. The Central sales-tax rate may be reduced by 1 per cent.There is no change anticipated in customs duty. Procedural issues such as benefits for exports, looking at the definition of exports may find a place in the Budget.
Mythili Bhusnurmath, Senior Editor, Economic Times, was of the opinion that the priority in the forthcoming Budget is to cut down on government borrowing and reduce expenditure on subsidies. Our economy has the potential to grow at 9 per cent provided steps are taken to address the unfulfilled reforms agenda.
This would include curtailing revenue deficit, raising FDI limits, initiating legal reforms and improved governance. Besides, the Government should act as a facilitator and not as a player in business as otherwise the playing field would become uneven.
RV Kanoria, Chairman, Economic Affairs committee of PHD Chamber, stressed on the need for developing an Indian Common Market for movement of goods and services. All local taxes such as octroi, purchase tax, entry tax etc should be subsumed within GST.
Our manufacturing sector should be incentivised by addressing constraints such as infrastructure bottlenecks, cross subsidization etc. Direct tax code needs to be scrapped as the provisions of asset based taxes etc are detrimental for industrial development.