labels: economy - general, economic survey 2007
What fiscal steps do experts foresee?news
27 February 2007

The economic survey was tabled in Parliament today and suggested several fiscal measures.

The survey states that measures need to be taken to revive the corporate debt market and encourage institutional investment.

In his statement, the Finance Minister said,"Regarding concern about the rising prices we share the concern and we have taken a number of steps to moderate prices and we will continue to take steps. The most heartwarming aspect of the economy is that both gross domestic sales and gross domestic investments have moved up very sharply."

According to the survey, tax exemptions will cost the government a little over Rs 1 lakh crore in lost revenue. The survey calls for a friendly tax administration.

Saumitra Chaudhari, the economic advisor of ICRA, states, "I think the FM is suggesting both that he will take some fiscal measures and that monetary measures may be taken. He is suggesting that on both they will have to remain on guard. There is no one set of instruments available." He adds that there is a possibility that external duty cuts, excise duty cuts on one hand and on the other hand, a further hike in interest rates is possible.

It also says that while the peak rate of customs duty was brought down to 12.5 per cent this year, the rate actually collected for 10 groups was 11 per cent, down from 14 per cent last year. VAT collections for the first half of this year was up 26 per cent.

The survey also calls for an increase in domestic production of staples like rice, wheat, cooking oils and pulses through better technology. It adds that , in the short run, there will be a gap between the remunerative price paid to farmers and fair price toconsumers but these should not translate into increased food subsidy.

The survey states that customs duty collection rate is 11 per cent down from 14 per cent and further tax reform is needed it also says that expenditure control is not happening.

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What fiscal steps do experts foresee?