New Delhi, Feb 27: Laying the pitch for the Modi government’s first full-year budget, the Economic Survey Friday called for “Big Bang” reforms, raising public investments to drive economic growth and improving business environment by making regulation and taxes less onerous.
The survey forecasts that the economy will grow by 8.1-8.5 per cent in 2015-16, compared to 7.4 per cent in the current fiscal, and by 8-10 per cent in years thereafter, under a new method of calculation.
“India has reached a sweet spot and… there is scope for Big Bang reforms now,” it said, adding a political mandate for reforms and a benign external environment have created a historic moment of opportunity to propel India onto a double- digit growth trajectory.
Union finance minister Arun Jaitley, who laid a copy of the survey in the Lok Sabha, must in his budget Saturday “continue the process of fiscal consolidation, embedding actions in a medium-term framework”, the survey said.
“Decisive shifts in policies controlled by the Centre combined with a persistent, encompassing, and creative incrementalism in other areas could cumulate to Big Bang reforms,” the survey said.
The Budget should aim at creating a competitive, predictable, clean and exemption-light tax policy regime that will lower the cost of capital, incentivise savings and facilitate tax payer compliance.
The survey listed improvements to tax administration, easing the cost of doing business, labour and land law reforms, rationalising subsidies, creating a competitive, predictable, and clean tax policy environment and accelerating disinvestment as crucial for boosting investment and growth.
Chief economic adviser Arvind Subramanian, the author of the Economic Survey, said: “We are going to have moderated inflation and shall overshoot the RBI’s growth forecast.”
The pre-Budget document stated that private investment must remain the primary engine of long-run growth but in the interim public investment, especially in the Railways, will have an important role to play in the revival of growth and deepening physical connectivity.
It termed as game-changing the implementation of the GST and moving to technology enabled direct benefit transfers through JAM (Jan Dhan-Aadhaar-Mobile) Number Trinity, which can “wipe every tear from every eye”.
The survey suggested that fiscal deficit should be brought down to 3 per cent of GDP in the coming years, while the current account deficit (CAD) is estimated to fall to 1 per cent in 2015-16.
Retail inflation is expected to hover between 5-5.5 per cent in the next fiscal, according to the survey. PTI
