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Eco Survey tabled in LS, targeting 7 to 7.5 % growth for 2009-10

New Delhi, July 03, 2009

FM Pranab Mukherjee tabled the Eco Survey for 2008-09 that prescribes doing away with cess,surcharges on taxes,including Fringe Benefit Tax,sweeping refroms in areas like petrol pricing and financial sector and targeting 7 to 7.5%growth for 2009-10.

Reflecting the changed political alignment, the Economic Survey on Thursday sought radical financial reforms and tax cuts, accelerated disinvestment and freeing of oil and fertiliser prices to stimulate the economy.

Laying the roadmap ahead of the Budget, it prescribed elimination of all cesses and surcharges, including Fringe Benefit Tax, a new Income Tax Code, 49 percent FDI in insurance and defence sectors and ending the state monopoly in running trains, nuclear plants and coal mining.

Free from the pressures of the Left parties that it faced in the last five years, the Manmohan Singh government has already announced high priority for financial sector reforms and disinvestment, which according to the Survey should have a target of mobilising Rs 25,000 crore annually.

The Survey, presented by Finance Minister Pranab Mukherjee in Parliament, also suggested that government allow FDI in multi-brand retail and raise foreign direct investment in insurance and banking.

Stating that the worst of the global meltdown was behind, the Survey, presented in Parliament, said that a growth of up to 7.5 percent was possible during the current fiscal but cautioned that financial investors could be manipulating global oil and commodity prices.

The economy grew by 6.7 percent in 2008-09, pulled down by slower expansion of 5.8 percent in the second half of the fiscal in the face of the global crisis.

The Survey was also for review of customs duty exemption and moving to a uniform duty structure, as also implementation of Goods and Services Tax from April next for long-term financial sustainability.

Asking the government to divest up to 10 percent equity in all unlisted public sector, it recommended auctioning of all the unviable PSUs.

Though there are indications that the economy may have weathered the worst of the downturn, it cautioned that the situation needed "close watch on various economic indicators including impact of the economic stimulus and developments taking place in the international economy."

Giving a snapshot of the economy during 2008-09, the Survey said: "The Indian economy has shock-absorbers that will facilitate early revival of the growth," adding that banks were financialy sound and forex reserves and debt position were within the comfort zone.

The fall-out of the global economic crisis on the Indian economy had been "palpable" in the industry and trade sectors and had also permeated the services sector, the Survey said, pointing that the wide-ranging challenges included enhancement of physical infrastructure and productivity in farm sector.

A day after the government raised the prices of petrol and diesel by Rs four and two, respectively, it said that fuel prices should be freed from government control.

Besides, it added, the government should also develop a policy response system and financial buffer for use when oil prices rise above USD 80 per barrel in the global market.