Monday, February 27, 2006

Eco Survey pegs growth at 8.1%

Eco Survey pegs growth at 8.1%: "Cautioning that the economy's rosy outlook was not devoid of risks of inflation, hardening interest rate and fiscal deficit, Economic Survey prescribed hastening tax and labour reforms.

The 2005-06 Survey tabled in Parliament said the Indian industry needed to be unburdened from high level of taxes.

Identifying power shortage as the single most impediment to growth, the Survey said appropriate policy initiatives constituted the first and foremost challenge for speedy infrastructure development.

It favoured liberalisation of FDI regime for captive mining as slowdown in mining sector was of concern, especially coal.

The Survey said regretting that the movement towards market determined prices in the hydrocarbon sector has floundered pending resolution of subsidies in domestic LPG and PDS Kerosene.

The Survey said high deficit, unproductive expenditure and tax distortions have constrained the economy from realising its full growth potential.

The Survey also stated that there was much scope for better productivity in expenditure and greater growth through deepening the reform process for harnessing higher savings and investments.

High and volatile global petroleum prices put an uncertainty in inflation outlook casting its shadow on the interest rate scenario, which may pose a risk of dampening the domestic investment boom.

The fiscal risk, both at the Centre and state level, has led to expenditure compression of the wrong kind. The government should revert to meeting the FRBM target of reducing fiscal and revenue deficit by 0.3 and 0.5 per cent of GDP annually.

The Survey cautioned the Government while constituting sixth pay commission to avoid deterioration of state and central finances.

The Survey laid special emphasis for speeding up agriculture and rural development, particularly in areas like horticulture, floriculture, organic farming, genetinc engineering, food processing, branding and packaging and futures trading.

It also listed some of the issue that needed to be tackled in agriculture like low yield, volatility in production and wide disparities in productivity.

It also favoured a shift from the existing Minimum Support Price (MSP) and Public Procurement System and developing alternative product markets.

The Survey stressed on a paradigm shift to encourage banks to look at credit to small and medium enterprises and agriculture as an opportunity for profit.

It suggested efficient management and delivery of social sector programmes through adequate capacity building, decentralisation of implementation and transparency in delivery and accountability of agencies involved.

It said emphasis should be laid on quality of outcome of various social sector programmes including education and health rather than quantity of coverage.

Concerned over the rapid growth of public pension liability, the Survey wanted pension reforms, including the passage of Pension Fund Regulatory Development Authority Bill, to be speeded up. (PTI)"

No comments: