Economic Survey: 6 Important suggestions which Sarkar must take

Prelude to our original full blown series!

“I am the chief economic adviser, not the chief political decider,” chief economic advisor Arvind Subramaniam said in response to a question about whether the suggestions in the Economic Survey 2015-16 will find space in the budget.

But, you are an aspirant, aren’t you? And in a rare case that the interview panel grills you on your analysis on the Economic Survey, here’s what can save your ass!

#1. Do something urgently on subsidies

The survey lists seven items – kerosene, electricity, LPG, railways, petrol, diesel, aviation turbine fuel and gold – on which the implicit subsidy to the rich amounts to RS 10 lakh crore! “. . . rectifying some egregious anomalies may be good not only from a fiscal and welfare perspective, but also from a political economy welfare perspective, lending credibility to other market-oriented reforms,” the Survey says.

#2. Work seriously on ending tax exemptions

  • No profession should escape the tax net
  • Clear reference to agricultural income, which is not taxed at all
  • While the government is working on ending tax exemptions for the corporate sector, what about the agriculture sector!

#3. Don’t raise exemption thresholds

  • The Survey junks the theory put out by Thomas Piketty that India under-taxes and under-spends
  • Bring more people under tax net. Let the threshold stay where it is!

#4. Spread the JAM (Jan Dhan Yojana, Aadhar and Mobile transactions) trilogy to new areas

  • How to go about it? What about its efficacy? The Survey suggests doing this based on two criteria – the extent of leakages and the extent of central government control
  • Subsidies with higher leakages have larger returns after introduction of JAM
  • It will be easier to roll out JAM in areas where the central government is the main provider of the subsidy

#5. Focus on easier exits

Not just about corporate exits! The Survey expands the paradigms of exits

  • Allow easier entry to encourage competition; address legal lacuna through laws (which is being done with the new bankruptcy law)
  • In the case of agriculture, exit from the current cereal-centric, regionally concentrated, input-intensive policies to pulses-oriented, regionally-broad based, more-for-less inputs system

#6. Undertake serious reform of the fertiliser sector

The Survey suggests a cap on the number of subsidised bag each farming household can purchase and insistence on biometric authentication at the point of sale (POS)


 

Source: Swarajyamag

PS: This was just a trailer. Original series on Economic Survey with back2basics reference coming soon.

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