Reviewing the economy, the Prime Minister’s Economic Advisory Council (PMEAC) regarded GDP growth in the country with cautious optimism. It is perhaps a hackneyed phrase but not to be dismissed. According to the Council, growth has been estimated to range at 7.5-8% in 2012-13. That is however subject to the inflation rate dipping to 5-6%. What is assumed is improved economic conditions hinging on greater price stability and that supportive government policies will spur investment-led growth. The Council has set forth ambitious targets like capacity creation in vital sectors like coal, power and roads. What is equally important is the need to reduce government borrowing. That will facilitate credit flow to the private sector and hike corporate investment. The bloated current account deficit has also come into focus. This has dampened the flow of foreign investment which is more in favour of countries with low fiscal deficits and a reasonable rate of inflation. It is hoped that steps will be taken in India to control fiscal and inflation hurdles.
The PMEAC has stressed the need to curtail subsidies which can lower government spending. That will increase the revenue in the Centre’s kitty and put a curb on deficit. Diesel price control is a possible avenue to attaining this goal. Revenue can also be increased by hiking excise and service tax. It is also expected that the goods and services tax (GDS) will be put into effect and the direct tax code subjected to the necessary changes. Assembly elections in five states will be over before Budget Day, March 15. The Budget this fiscal should therefore be focused on big ticket reforms.