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The economic survey for 2013-14 released on Wednesday has called for reforms for long-term growth on three fronts — a low and stable inflation regime, tax and expenditure reforms and the need for a regulatory framework to steer the economy out of its current low-growth phase.
According to an India Ratings report, the survey also recommends addressing supply-side bottlenecks in agriculture by creating a competitive national market for food as well as introducing reforms in subsidy rationalisation and the need to provide income support to farmers and poor households.
The survey also expects the economy to grow in the range of 5.4–5.9 per cent in FY15.
The survey feels lowering of inflationary expectations will increase domestic household financial savings and will make resources available for investment. We expect the Budget to make changes in tax exemption limits to help improve household financial savings.
The survey also recommends a new Fiscal Responsibility and Budget Management Act with better accounting practices, greater transparency and improved budgetary management. One of the major issues with Indian public finances has been the low level of revenue, which amplifies its debt/revenue ratios. We believe due to stickiness of expenditure, revenue augmentation by tax reforms is the best way to improve India’s public finances.
The survey also emphasises on the need for a simple, predictable and stable tax regime and advocates a single-rate goods and services tax, fewer exemptions in direct taxes, and a transformation of the tax administration. It further urges the Government to focus on outcomes rather than on expenditure and inputs while providing public goods.
The annual economic survey presented in Parliament comprises of technical advice from economic advisers in the Ministry of Finance. The economic survey presents an assessment of issues and challenges faced by the economy and suggests a policy prescription and reform agenda to the Government to address these issues. Some prescriptions of the economic survey tabled in the Parliament today could find a place in the Budget to be announced by the Finance Minister tomorrow.
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