Financial Daily from THE HINDU group of publications
Sunday, Jun 06, 2004
Industry & Economy - Economy
Economists want step-up in farm investment
(From left) Mr D.C. Gupta, Finance Secretary; Dr B.B. Bhattacharya, Director, Institute of Economic Growth; Prof Bibek Debroy, Director, Rajiv Gandhi Institute for Contemporary Studies; and Mr N.S. Sisodia, Banking Secretary, before meeting the Finance Minister, Mr P. Chidambaram, in the Capital on Saturday. Kamal Narang
New Delhi , June 5
ECONOMISTS on Saturday asked the Finance Minister, Mr P. Chidambaram, to step up public investment in agriculture with particular emphasis on creation of non-farm employment opportunities.
At a pre-budget meeting with the Finance Minister, economists suggested that corporates be offered fiscal incentives for investing in rural industries.
Further, they also suggested that the Government should look at reducing public expenditure at the Central and State levels through downsizing. The Union Government was also asked to explore the option of taxing the richer segment of the agricultural population.
The economists recommended rationalisation of taxes, introduction of value added tax, revisiting the Kelkar committee recommendations on direct taxes and widening of service tax net to increase revenue and cut fiscal deficit.
"What we require is a big push for growth with employment, starting with the agriculture sector. Government should take the lead. Private sector would then follow," said Dr B.B. Bhattacharya, Director, Institute of Economic Growth.
Investment in agriculture has virtually come down 50 per cent in the past several years. So, Government must initially invest more money to achieve a growth of 3.5 per cent in farm sector from the current average of 2 per cent, he said.
A majority of economists were not in favour of a drastic reduction in provident fund rates. They also held the interest rates on deposits should be increased to prop up savings rate in the economy.
Some of the economists asked the Government to define profit norms and aim at selectively privatising the less profit-earning enterprises among profitable PSUs.
They also held that the Government must refrain from reducing import duties in the absence of WTO compulsions and the appreciation in the value of the rupee.
Mr Bibek Debroy of Rajiv Gandhi Institute pitched for higher investment in power, water and road sectors, stating that such a move can ensure employment generation and spur economic growth.
To carry forward the reforms, he said the Centre has to take responsibility to rehabilitate the States, most of which are virtually bankrupt. He also underscored the need for early introduction of value added tax.
The National Institute of Public Finance and Policy (NIPFP) Director, Mr Govind Rao, said widening the scope of service tax was vital to prop up revenue.
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