Laying the road map ahead of the Budget, the Economic Survey today sought sweeping financial reforms, an ambitious disinvestment programme, free pricing for fuel and fertiliser, opening railways to private sector and liberalising FDI in defence, retail and insurance areas.
Stating that the worst of the global meltdown was behind, the Survey said a growth of up to 7.5 per cent was possible during the current fiscal but cautioned that financial investors could be manipulating global oil and commodity prices.
Asking the government to divest up to 10 per cent equity in all unlisted PSUs with an annual disinvestment target of Rs 25,000 crore, the Survey also recommended auctioning of all unviable PSUs.
Though there are indications that the economy may have weathered the worst of the downturn, it cautioned that the situation needed “close watch on various economic indicators, including impact of the economic stimulus and developments taking place in the international economy.”
Giving a snapshot of the economy during 2008-09, the Survey said the Indian economy has shock absorbers that will facilitate early revival of the growth, adding that banks were financially sound and forex reserves and debt position was within the comfort zone.
The fallout of the global economic crisis on the Indian economy had been palpable in the industry and trade sectors and had also permeated the services sector, the Survey said, pointing that the wide-ranging challenges included enhancement of physical infrastructure and productivity in farm sector.
The Survey 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 FDI in defence and insurance.
Besides, it added, the government should also develop a policy response system and financial buffer for use when oil prices rise above $80 per barrel in the global market.
Making a case for private sector’s entry into the coal sector, the survey said that the nationalised coal sector is a major roadblock in the steady growth of power sector.
As long as the coal sector remains a public sector monopoly, it could remain a bottle neck for accelerated development of the power sector, said the Economic Survey 2008-09 tabled in the Parliament.
The Survey also prescribed reforms in the subsidy regime in oil, food and fertiliser sectors and asked the government to review the possibility of direct cash transfer to the targeted people.
The survey further said the government should reform petroleum, fertiliser and food subsidies to reduce leakages and ensure targeting in order to provide benefit to the needy.
