‘Allow FDI in multi-brand retail, cut subsidies’
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Calling for speedier project clearances, more clarity on taxation, containing inflation and fiscal deficit, Prime Minister's Economic Advisory Council (PMEAC) has suggested a slew of measures including dismantling subsidy for the farm sector, restructuring of cabinet committee on infrastructure, and allowing FDI in multi-brand retail for accelerating economic growth and insulating it from global crisis.
The PMEAC, chaired by C Rangarajan, in its Economic Outlook 2012-13 report released Friday, said the government needs to address the hurdles in the infrastructure sector and expedite project clearance.
He said, for high-impact infrastructure projects, beyond a certain threshold, a cabinet committee comprising ministers of concerned departments, should be appointed to "take an integrated view."
For this, the existing cabinet committee can be recast and called "cabinet committee for sustainable development of infrastructure". This will help existing and future projects, thereby attracting investment and expediting execution.
Growth can be propelled only by shedding the "unbearable" fiscal burden, and the government can begin with dismantling fertiliser subsidy "without causing disarray", to rein in the fiscal deficit, the Prime Minister's panel said. It argued that the contribution of subsidies to productivity enhancement is fast disappearing.
The panel also made case for reduction of input subsidies, and subsidy on power and surface irrigation. This along with legalising tenancy and agricultural marketing reforms would help the agriculture sector growth, the panel added.
Of the Rs 65,592 crore budget estimates for fertiliser subsidies during the current fiscal, about Rs 35,000 crore have already been disbursed. The panel also suggested trimming down of petroleum products subsidies. It stressed on the need of a phase-wise increase in diesel price and a cap on the number of subsidised domestic LPG to cut down on the subsidy bill.
Making a case for structural reforms, the PMEAC said FDI up to 49 per cent should be allowed in the multi-brand retail for channeling transfer of capital and technology in the country.
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