Recommending an end to all cesses and surcharges on taxes,and free pricing of fertiliser and fuel ahead of the Union Budget for 2009-10,the Economic Survey suggested aggressive disinvestment and financial sector reforms to bring the economy back to high growth track. "Review and phasing out of surcharges,cesses and transaction taxes (such as commodities transaction tax,securities transaction tax and fringe benefit tax)," it said,prescribing possibly the boldest set of financial sector reforms and lifting of all restrictions on farm sector trade. The Survey,tabled in Parliament by Finance Minister Pranab Mukherjee,also sought reduced role for government and end of state monopoly in areas like Railways,coal and nuclear power while seeking up to 49 per cent Foreign Direct Investment in defence and insurance. Asking for a disinvestment target of minimum Rs 25,000 crore annually,the Survey said that every single Public Sector Enterprise should be listed while loss making undertakings,that are beyond revival,should be auctioned. The hitherto politically sensitive areas of FDI in multi-brand retailing,also caught attention of the the Survey,which recommended foreign investment in the area beginning with food. 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. Analysing the impact of the global financial crisis and the challenges,the Survey said: "The Indian economy has shock-absorbers that will facilitate early revival of the growth." SURVEY-HIGHLIGHTS Following are the highlights of the pre-Budget Economic Survey: 2008-09. * Unleash reforms - phase out cesses,surcharges and transaction taxes (such as commodities transaction tax,securities transaction tax and Fringe Benefit Tax) * Introduce new Income Tax Code that results in neutral corporate tax regime * 7-7.5% growth possible in 2009-10 * Allow 49% FDI in defence and insurance; permit FDI in multi-format retail starting with food * Proposes another round of fiscal stimulus including tax cuts and increase in expenditure * Decontrol petrol and diesel prices; end Govt monopoly in railways,coal and nuclear energy * Lift all bans on future contracts to restore price discovery; decontrol sugar and fertiliser * Revitalise disinvestment programme to generate Rs 25,000 crore annually,list all PSUs and auction those beyond revival * Economic growth decelerated in 2008-09 to 6.7 per cent from nine per cent in 2007-08 * Fiscal deficit in 2008-09 shot up to over 6 per cent from 2.7 per cent in 2007-08 * Survey indicates FRBM-II to get back to path of fiscal consolidation * Complete the process of selling 5-10 per cent equity in identified profit-making non-'Navratna' PSUs * List all unlisted PSUs and sell a minimum 10 per cent equity to public. * Auction all loss-making PSUs that cannot be revived * In PSUs with zero networth,allow negative bidding in the form of debt write-off * Auction 3G spectrum * The auctioned spectrum must be freely tradable,with capital gains on spectrum to be taxed under the Income Tax Act * Rationalise Dividend Distribution Tax to ensure full single taxation of returns to capital in the hands of the receiver * Reform petroleum (LPG,Kerosene),fertiliser and food subsidies to reduce leakages and ensure targeting * Limit LPG subsidy to a maximum of 6-8 cylinders per annum per household * Phase out kerosene supply-subsidy by ensuring that every rural household has a solar cooker and solar lantern * Review customs duty exemptions and move to a uniform duty structure to eliminate inverted duties * Implemnet GST from April 1,2010 * Rapid operationalisation of UID Authority within 3 months * Agriculture growth fell sharply to 1.6 per cent in 2008-09 from 4.9 per cent * Exports grew at 3.4 per cent to 168 billion dollar in 2008-09 from 163 billion dollar in previous fiscal * Imports grew at 14.3 per cent to $287.75 bn from $251.65 bn * Trade balance deteriorated to $119.05 bn from $88.52 bn.
