• Budget 2011

The PHD Chamber’s wish list for Budget 2011-2012.

1.        Provide a medium term strategy for fiscal consolidation to ensure growth — No doubt the revenue received from 3G auction would help reduce fiscal deficit this year. But this is only a one-shot option and this windfall will not be available each year for fiscal improvement to be sustained. Hence, an appropriate strategy for sustaining fiscal discipline should be contemplated. The aim should be to narrow Government’s fiscal deficit to 4.8 percent of GDP in 2011-12 as mentioned in the Budget 2010-11.

2.        Clean up the public distribution system and eliminate leakages — Skills development, access to basic services like health, education, food, safety, and infrastructure are in our view the key critical areas to achieve all-inclusive growth.

The initiatives like Skill Development Mission, formation of National Skill Development Co-ordination Board, and NREGA are appreciable. The need is to make effective use of these schemes so as to maximize the benefits for the society. The government should focus on outcome budgets for the effective use of these schemes, in our view.

3.        Focus on Infrastructure Development – We believe the investments in infrastructure, rightly identified as a priority area, should be stepped up from the current level of about 7.5% of GDP to 9-10 percent of GDP by 2012.  An appropriate legal, administrative and regulatory framework should be put in place for encouraging public-private partnership and inflow of FDI in infrastructure.

4.        Agriculture Reforms and Food Security — In order to put growth on to a new trajectory in India, agriculture needs to grow faster. More than 230 million people in India are still nutrition deficient or food insecure.  In this context, the government has already launched the National Food Security Mission (NFSM) in 2008.  This Mission should be provided the requisite push with greater thrust on sub-programmes like nutrition. The Mission could also be dovetailed with government flagship schemes like NREGA to improve the nutrition quotient of the rural poor.

5.        Rationalisation and Simplification of our Present Tax System — The government must not let the impasse on GST to stay for long and should complete the legislative process in consultation with the states and resolve all pending issues relating to design so that the tax could roll out at least from April 1, 2012. This will enable existing players to plan their projects and factor in their cost of operation.

It had been perceived that CST would be phased out before GST is introduced. However, GST has now been postponed to April 1, 2012 and part of the stimulus provided during the financial crisis has also been withdrawn. At this juncture, it is strongly recommended that now CST rate should be reduced to at least 1 percent from 1 April 2011.

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Budget, Budget 2011-2012, PHD Chamber, wish list