Pre-Budget Discussions

The Finance Minister P. Chidambaram held a meeting today with eminent economists here today as part of the pre-budget consultations with various interest groups. Welcoming the participating Economists, the Finance Minister invited them to give suggestions for the forthcoming Union Budget.



The various suggestions offered by the economists include the following:

• Remove endowment restrictions on investment allocation for expanding higher education facilities, which is a crying need at this stage of the country's economic development.
  
  
• Introduce a new regulatory architecture for higher education for removing entry barriers, enhancing quality of education and improving access of disadvantaged groups to such education.
  
  
• Change the rules governing 'not for profit' educational institutions for encouraging greater involvement of private enterprise in higher education.
  
  
• Consider introduction of an 'inheritance tax' with tax concessions for philanthropic contributions to educational institutions on the lines prevailing in the US for encouraging growth and expansion of educational institutions.
  
  
• Offer scholarships to children entering sixth standard, on the lines of the existing National Talent Search scheme, for improving enrollment in upper primary (6th-8th standards) schools and also monitoring outcomes.
  
  
• Reduce customs duties and narrow the gap between peak and floor rates.
  
  
• Remove the existing exemptions from the indirect tax regime.
  
  
• Maintain the existing corporate income tax structure but review the existing exemptions.
  
  
• Simplify and rationalize the indirect tax system by removing existing exemptions for the small scale sector and special category States.
  
  
• Remove the Central Sales Tax by announcing a road map for its elimination, to derive the maximum benefit of the new State level VAT regime and to ensure optimum location of economic activity across States.
  
  
• Implement autonomy measures for unlocking productive potential of public sector banks.
  
  
• Emphasize expansion of rural non-farm activities in the overall policy thrust on rural development.
  
  
• Carry forward fiscal consolidation at the State and Central levels.
  
  
• Rationalize and simplify expenditure planning in government departments.
  
  
• Emphasize on performance-budgeting in social sectors and provide incentives to civil servants for good performance at the field level.
  
  
• Include improved corporate governance as an objective in formulation of tax policies pertaining to taxation of capital market instruments, for example, the issue of dividends in the hands of the recipients.
  
  
• Increase budgetary allocation for community care homes and crisis centres.
  
  
• Include quality, as a monitorable parameter, in disbursing funds for enhancing drinking water facilities.
  
  
• Strengthen the scope of the National Rural Employment Guarantee Act.
  
  
• Introduce measures for facilitating micro-enterprise development.
  
  
• Consider introduction of subsidies for encouraging corporate R&D.
  
  
• Introduce weighted tax incentives for different categories of incremental exports.
  
  
• Attach export obligation requirements on incoming FDI for increasing exports.
  
  
• Phase out tax incentives for software exports.
  
  
• Monitor the growing volume of FII inflows for avoiding undue volatility.
  
  
• Introduce efforts for developing a vibrant government bond market with wider participation and involvement of the exchanges
  
  
• Ensure a prominent role for the Government in the ongoing 'Bharat Nirman' initiative with regard to service provision for the poorest sections.
  
  
• Maintain the fringe benefit tax (FBT) while gathering experience regarding its better implementation.
  
  The meeting was attended by eminent economists and economic experts from various professional, educational and research institutions of the country, along with senior officers of the Ministry of Finance.