I/II. http://www.hindustantimes.com/StoryPage/StoryPage.aspx?sectionName=HomePage&id=4257203a-8878-45d7-b874-7caafe9304bd&Headline=Economic+Survey+seeks+policy+shift,+taxes+slashed
Economic Survey seeks policy shift, taxes slashed The government’s pre-budget economic survey has recommended radical policy changes including foreign investment in multi-brand retail, increasing work hours for factory workers and allowing overseas institutions in higher education. “The economic survey which focuses on reforms is a positive move as financial sector reforms are crucial and they have to be done despite the global crisis,” ICRIER director Rajiv Kumar told Hindustan Times. The survey, which predicted the economy to grow 7 per cent this fiscal year, also pushed for abolishing fringe benefit tax (FBT), surcharges and cesses. It also set a Rs 25,000 crore annual revenue target by divesting government equity in public sector undertakings. But question marks hang over how many of these recommendations could fructify as a persisting global economic crisis, political compulsions and a shaky monsoon at home loom in the backdrop. In the past similar recommendations have not always found reflection in the budget. Allowing private participation in coal mining, FDI in retail, increasing workweek to 60 hours, and raising FDI limits in insurance to 49 per cent were also part of last year’s survey. The government’s report card of the economy, tabled by Finance Minister Pranab Mukherjee, 73, in Parliament on Thursday, painted a bullish recovery of the economy to a high-growth trajectory if reforms were pursued vigorously. “India should be back on the new trend growth path of 8.5 to 9 per cent per annum provided the critical policy and institutional bottlenecks are removed,” the survey said. “It is therefore imperative that the government revisit the agenda for pending economic reforms in the first instance with a view to renew the growth momentum.” Mukherjee said the monsoon would be normal and with luck the country could surpass the GDP growth target of about 7 per cent. “I do hope there will be recovery and it will be possible to achieve the target,” he told reporters. “It may be, if luck favours, we will surpass (the GDP target).” The survey also called for reforming the fertiliser and food subsidy regimes, and an auction of third-generation mobile phone spectrum that it said should be freely tradeable. It also called for “greater urgency” in removing hurdles to investment in infrastructure by government and private sector. “The economic survey which focuses on reforms is a positive move as financial sector reforms are crucial and they have to be done despite the global crisis,” ICRIER director Rajiv Kumar told *Hindustan Times*. Federation of Indian Chambers of Commerce and Industry president Harshpati Singhania said the survey has offered a confident outlook for the Indian economy in 2009-10. “The government will have to provide stimulus packages to give further support to the recovery process.” II. http://www.financialexpress.com/news/survey-pins-hopes-on-economic-revival/484688/ *Survey pins hopes on economic revival* ASHOK B SHARMA Posted online: Jul 03, 2009 at 2038 hrs *New Delhi*Indian Government’s Economic Survey 2008-09 has given the hope of revival of the economy saying that it has “shock absorbers” that will facilitate early revival of growth. Banks are financially sound and well capitalized. The foreign exchange reserves position remains comfortable and the external debt position has been within the comfort zone. It said “the rate of inflation in prices has since abated and provides a degree of comfort on the cost side for the production sectors. Agriculture and rural demand continue to be strong and agriculture production prospects are normal.” According to the Survey while there are indications that the economy may have weathered the worst of the downturn, in part, due to the resilience of the economy and also various monetary and fiscal measures initiated during 2008-09, nevertheless, the situation warrants close watch on various economic indicators including the impact of the economic stimulus and developments taking place in the international economy. It suggested taking policy measures that squarely address the short and long term challenges which would help achieve tangible progress and ensure that the outlook for the economy remains firmly positive. The Economic Survey noted that during the last two years, Indian economy had been buffeted by three major challenges originating in its external sector. First, a surge in capital inflows which reached a crescendo in the last quarter of 2007-08. Second, an inflationary explosion in global commodity prices which began even before the first challenge had ebbed, that hit us with great force in the middle of 2008. There was barely any time to deal with this problem before the third challenge, the global financial meltdown and collapse of international trade hit the world with severity. “Each of these, however, has implications for medium-term, that requires a considered and integrated response if our objective of sustained high growth is to be realized. An analysis of the impact of these shocks brings to the fore the importance of pursuing reforms, including in the financial sector, to make the economy more competitive and the economy regulatory and oversight system more efficient and sensitive to new developments,” it said. The uncertainty surrounding the macro-economic developments world over in 2009-10 and the need for minimizing the second round impact of the global shock call for a continued fiscal policy stimuli, it said and noted that while in 2008-09 fiscal expansion in an overall sense helped arrest the decline in growth, given the relatively weaker automatic stabilizers in operation in the country, a more selective discretionary fiscal policy was used to address the affected sectors and sections of the workforce in a sustainable manner and promote investments that would not only boost demand in the short run but yield long run growth dividends. The Survey suggested that within the proposed fiscal expansion, the mix of expenditure and tax cuts would be critical in the context of its impact on overall macro-economic fundamentals like growth, interest rates and exchange rate. A commitment to return to Fiscal Responsibility and Budget Management Act of 2003 (FRBMA) mandate at the earliest and quick reversibility of expansionary policies are critical for markets to synchronise their expectations with that of the Government and work in a coordinated manner towards restoration of the high growth momentum. The Economic Survey also suggested the need for adequate liquidity and credit from financial sector. But once the economic growth picks up sufficient momentum, the excess liquidity should be rolled back in an orderly manner. It cautioned monetary transmission channels has been more efficient in the money and bond markets and somewhat sluggish in credit market with its implications for the real side of the economy The credit market suffers from structural rigidities which may have been reinforced in the recent years due to a high credit demand encouraging the banks to raise deposits at higher rates for maintaining long-term liquidity. These high rates have now come in the way of cutting lending rates at a pace which is consistent with the current outlook on inflation and the need for stimulating investment demand, the Survey noted. It suggested expansion of mutual fund industry, greater insurance sector penetration in non-life business. “A reasonably well developed bond market is required to supplement the banking system in meeting the requirements of the corporate sector for long-term capital investment besides raising resources for infrastructure development in the country,” it said. The Pension Fund Regulatory and Development Authority faces the challenge of covering the unorganized sector under the NPS, empowering the subscribers to take appropriate investment decisions based on their risk and return profile, provide safety and optimum returns and to improve literacy levels. III. http://www.topnews.in/economic-survey-2009-report-nirmal-bang-2185597 Economic Survey 2009 Report By Nirmal Bang Submitted by Malini Ranade <http://www.topnews.in/user/malini-ranade> on Fri, 07/03/2009 - 05:58 * The Economic Survey (ES) report and the comments of Finance Minister (FM) in the parliament while presenting Lots of ifs and buts for future growth in FM’s speech had created uncertainty and market was not able to perform.GDP. ES has identified certain critical areas where government may take some decision in the forthcoming budget. ES reading and indication for budget: • The mention about possible threat of dumping by other countries in India indicates possibility of increase in Import duty on various items which are vulnerable to dumping and can disturb Indian industry like steel sector. • Research and development may be encouraged with fiscal policy. This may be good for Pharma Sector. • The mention of narrowing the deficit is critical to keep interest rate low and to restore the highgrowth rate of GDP. This may act positive for banking sector and the capital markets. Announcement of increase in petrol and diesel price is also one step in this direction. • The indication of generation of Rs.25000cr per year from disinvestment and another similar amount from sale of 3G licenses in ES will also help in reducing fiscal deficit. • ES has mention of conservation of natural resources like Coal, Iron Ore and Natural Gas may indicate some export duty on export of Iron ore. • The passage of Pension Fund Regulation and increase in Foreign Direct Investment (FDI) in the insurance sector to 49% was mentioned in ES. • Higher and Skill education and faster implementation of infrastructure may be emphasized in the budget. • ES has talked about growth in labour intensive industry and review of labour law. Any step in this direction can support Textile industry. • ES also made a case for removal of multiple tax like FBT, Surcharge, STT etc for simplification of tax structure but considering the higher fiscal deficit government may be restricted from removing these taxes. • FM speech may find some statement on corporate governance as well. Highlights • Economic growth decelerated in FY 2009 to 6.7%. This represented a decline of 2.1% from the average growth rate of 8.8% in the previous five years (FY 2004 to FY 2008). • The growth in agriculture and allied activities decelerated from 4.9% in FY 2008 to 1.6% in FY 2009, mainly on account of the high base effect of FY 2008. • The manufacturing, electricity and construction sectors decelerated to 2.4, 3.4 and 7.2% respectively during FY 2009 from 8.2, 5.3 and 10.1% respectively in FY 2008. • Despite the slowdown in growth, investment growth was at a rate higher than that of GDP. The ratio of fixed investment to GDP consequently increased to 32.2% of GDP in FY 2009 from 31.6% in FY 2008. Gross capital formation (GCF), which was 25.2% of the GDP in 2002?03, increased to 39.1% in FY 2008. • The gross domestic savings as a percentage of GDP at current market prices stood at 37.7% in FY 2008 as compared to 29.8 % in FY 2004. • A noteworthy development during the year was a sharp rise in Wholesale Price Index (WPI) inflation followed by an equally sharp fall, with the WPI inflation falling to unprecedented level of close to zero % • The index of industrial production for the year FY 2009 points towards a sharp slowdown withgrowth being placed at 2.4%. Manufacturing growth was placed at 2.3% in FY 2009 as compared to 9.0 % in FY 2008. Mining grew at 2.3% in FY 2009 as against 5.1% in FY 2008 while electricity showed a deceleration in growth from 6.4% in FY 2008 to 2.8% during FY 2009. • For three consecutive years (2005?06 to FY 2008), food grain production recorded an average annual increase of over 10 million tonnes. The total food grain production in FY 2008 was estimated at 230.78 million tonnes as against 217.3 million tonnes in FY 2007. As per the third advance estimates, the production of food grains in FY 2009 is estimated to be 229.85 million tonnes. In the third advance estimates, there is an improvement of 1.97 million tonnes over the second advance estimates for FY 2009 but the estimates are still lower than the target of 233 million tonnes set out for the year and also • The per capita income in FY 2009, measured in terms of gross domestic product at constant FY 2000 market prices, was Rs. 31,278. In FY 2008 this stood at Rs. 29,901. Per capita consumption in FY 2009 was Rs. 17,344 as against a level of Rs. 17,097 in FY 2008. * --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "Green Youth Movement" group. To post to this group, send email to greenyouth@googlegroups.com To unsubscribe from this group, send email to greenyouth+unsubscr...@googlegroups.com For more options, visit this group at http://groups.google.com/group/greenyouth?hl=en-GB -~----------~----~----~----~------~----~------~--~---
