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India govt should aim to reduce fiscal deficit : ASSOCHAM

Saturday, 25 February 2012 | 00:00
ASSOCHAM urged India government to remve subsidy, privatising certain rail corridors and taxing rich farmers to curtail expenditure and raising revenues to narrow the fiscal deficit and should aim at a fiscal deficit ranging around 3.5 per cent of GDP.
The government borrowings could inflate the fiscal deficit during 2011-12 to reach six per cent, he said adding market pricing of oil products will lead to reduction of Rs one lakh crore in the subsidy bill.
Another Rs one lakh crore could be saved if the entire range of import duties is reconsidered to examine where duty structure is hurting Indian manufacturers from cheaper imports of finished goods.
At the same time, policy makers should realise that globalisation is a new reality. The trillion dollar investment plan for infrastructure development during 12th Five Year Plan (2012-17) should be aggressive and focused on fund raising.
The ASSSOCHAM has also suggested some ways like widening the tax net, early implementation of Direct Taxes Code (DTC), speeding up disinvestment of public sector units and stimulating foreign direct investments in key sectors like retail, aviation, defence, pensions, insurance and mining to bring down the fical deficit.
However, the Reserve Bank of India has indicted that in the absence of credible fiscal consolidation, it will not be able to reduce interest rates to promote growth. So fiscal consolidation is at the crux of the Budget for 2012-13.
According to Rana Kapoor, senior vice-president ASSOCHAM and founder, managing director and CEO of Yes Bank,a 300 billion dollar bailout package by the International Monetary Fund (IMF) backed by OECD countries is essential for Greece to quell the Eurozone crisis. Due to economic gloom in the European Union, Indian economy has been impacted to an extent.
Meanwhile, the India government can take advantage of foreign capital seeking investments in new geographies due to the Eurozone crisis and large cash reserves with private and public sector companies. Thus the disinvestment process can be given a push with a target of Rs 70,000 crore for the next financial year.
Source: Commdoity Online
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