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March 06, 2011

Page: 25/39

Home > 2011 Issues > March 06, 2011

Expectations from Budget 2011
GOVERNMENT has to focus on Fiscal responsibility

By Gopal K Agarwal

  1. Over the last few years there is complete indiscipline in the management of budgetary deficit on account of various schemes and not providing them in the budget:

    Loan waiver to farmers,Social Security’s Scheme, MNREGS, with rampant corruption and complete disregard to labour and industrial policy.

  2. Excess liquidity in the system as a result of: Deficit financing, Corruption and black money.

    Causing dilemma to Policy Makers over the tradeoff between: Inflation, Economic growth.

  3. Long overdue Pending Commodities market reforms: The whole Supply chain is in disarray, Large scale Investment in storage and warehousing facility required through incentivizing Public Private Partnership (PPP) model, Agriculture Produce and Marketing Committee Act needs review, Immediate passing FCRA act in parliament to properly empower Forward Market Commission (FMC).

  4. Some anomalies have come into Financial Markets that need immediate attention: Very High cost of transaction at domestic exchanges due to multiplicity of taxes leading to Fight of transaction to international market, Infrastructure investments for making Mumbai as a Global Financial Center, Autonomy of SEBI has to be kept intact and away from intervention of Ministry of finance, Complete removal of Securities Transaction Tax (STT), delinking it from Capital Gains Tax, which is the route being adopted to bring back money stashed in foreign countries by culprits through the Participatory Notes(PN) mechanism, Implementation of Uniform Stamp duty across all states and not link it to GST, which is facing stiff resistance from states.

  5. Checking illegal flows and bringing transparency in International financial flows: Signing of Double Taxation Avoidance Agreements (DTAA) with all tax havens, Control over Transfer Pricing so as to check Under and Over invoicing of imports and exports, Put checks and balances in the General Anti Avoidance Rules (GAAR) Provisions, to keep check on draconian powers to Income tax department.

  6. Disinvestment of Public Sector Units so that government concentrates on Governance instead of business and these units do not become dens of corruption for the people in power.

  7. Issue of subsidy payment directly to the end user in the form of cash through Unique Identification Number (UID). Subsidy should be target driven and not product based.

  8. Inclusive growth through structural reforms and not through social security measures. At present 37 per cent of GDP is being used for them and these are being misused to buy votes.

  9. FDI in retail and other sectors is a very contentious issue and needs a detailed rethink. Secondly at present we don’t need foreign exchange reserves to that extent therefore we can hold ourselves in this matter and change our priorities looking into the requirement of domestic industry and trade.

  10. Cooperative sector has contributed a lot to the overall development in the country and therefore has to be given special treatment. And the exceptions that have been withdrawn under Direct Tax Code (DTC) have to be restored, but only for smaller cooperative so that they do not become vehicle of business.

(The writer is a National Convener Economic Cell BJP)

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