CII endorses significant reforms proposed by Economic Survey

The Economic Survey released today proposed a revisit of the agenda for pending economic reforms. It also sounded a positive note on the early revival of growth in the economy, projecting GDP growth in the current year at 7% +/- 0.75%. Many of the recommendations of the Survey are similar to those made by CII in its pre-Budget Memorandum and in the Report on Economic Agenda for Action. "CII endorses the agenda for reforms set out by the Survey. Implementation of these reforms will go a long way in enhancing the growth potential of the economy", said Mr. Venu Srinivasan, President, CII.

Some of the key reforms mentioned in the Survey include tax reforms, rationalisation of subsidies, disinvestment in public sector units and FDI in insurance and pensions. Tax reforms such as the removal of inefficient taxes such as the FBT, CTT and STT have also been proposed by CII. Removal of surcharges and cesses and merging them with the direct tax rate will also help simplify the process of filing taxes. Subsidies on food, oil and fertilizers have been growing at an alarming rate and CII endorses the plan to streamline and target these subsidies.

"CII looks forward to the revival of disinvestment in PSUs. Not only will it provide funds to the Government but it will drive wider shareholding in key sectors of the economy where the public sector is dominant", said Mr. Srinivasan. According to CII, fixing a target of raising Rs 25,000 crore annually from this route as proposed by the Survey will provide consistency in the Government's disinvestment policy. Finally, the long-pending issue of raising the ceiling on FDI in the insurance and pension sectors will bring in much needed capital in these sectors and lead to higher intermediation of savings.

The Survey's focus on reducing the fiscal deficit is also welcome however CII view of the recovery in economic growth is green shoots in early stage. We reiterate that a roadmap is required towards fiscal consolidation and commitment to reduce Fiscal Deficit in the near future, said the CII release.