Financial Daily from THE HINDU group of publications
Thursday, Aug 05, 2004
Industry & Economy
FICCI wants Govt spending pruned
New Delhi , Aug. 4
AFTER sifting through the fine print of the Union Budget proposals 2004-05, the Federation of Indian Chambers of Commerce and Industry (FICCI) in its memorandum to the Finance Ministry has suggested certain key areas that require immediate attention.
According to the chamber, "to sustain a high GDP growth of above 8 per cent there is need for much more extensive effort than detailed in the Budget."
The medium-term road map for fiscal consolidation has laid down targets for better mobilisation of tax revenues and reduction in revenue and fiscal deficits and in Government liabilities. But there are still no direct constraints laid on limiting the growth of Government spending by cutting down consumption expenditure and wasteful spending.
Further, some steps have been made out for proper targeting of Budget subsidies. However, downsizing the Government as recommended in the Fifth Pay Commission and detailed by the expenditure reforms committee is yet to be operationalised, FICCI said.
Another aspect, which needs to be outlined, is a time frame for implementing a unified national value-added tax (VAT) system.
The Budget focuses on agriculture, water resources and the rural sector as well as elaborates a slew of schemes for the revival of these segments. "A major limitation that restricts growth of agriculture and rural incomes is the bifurcation of product markets and the absence of a common national market for all commodities," the chamber said.
A priority for the integration of a common national market is the abolishing of the Essential Commodities Act, legislated in the period of shortages, it said, adding that adoption of the model law for Agricultural Produce Marketing Committee (APMC) by the States has to be encouraged by providing incentives for early implementation.
Another major step that will supplement the tax incentives to boost the food-processing sector is an integrated food law in lieu of the piecemeal statutes that govern the operations currently.
Regarding the Planning Commission additional budgetary support of Rs 10,000 crore for these sectors, FICCI felt that an efficient utilisation of funds could be ensured if all non-statutory transfers to the States are linked with the performance criteria.
Moreover, it is also felt that the best way to mobilise additional funds for the social sector projects, such as primary education, would be better served through a dedicated fund from the proceeds of privatisation of the loss-making and non-strategic public sector undertakings.
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