Recommending an end to all cesses and surcharges on taxes, and free pricing of fertiliser and fuel ahead of the Union Budget for 2009-10, the Economic Survey today suggested aggressive disinvestment and financial sector reforms to bring the economy back to high growth track.
"Review and phasing out of surcharges, cesses and transaction taxes (such as commodities transaction tax, securities transaction tax and fringe benefit tax)," it said, prescribing possibly the boldest set of financial sector reforms and lifting of all restrictions on farm sector trade.
The Survey, tabled in Parliament by Finance Minister Pranab Mukherjee, 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 Foreign Direct Investment in defence and insurance.
Asking for a disinvestment target of minimum Rs 25,000 crore annually, the Survey said that every single Public Sector Enterprise should be listed while loss making undertakings, that are beyond revival, should be auctioned.
The hitherto politically sensitive areas of FDI in multi- brand retailing, also caught attention of the the Survey, which recommended foreign investment in the area beginning with food.
A day after the government raised the prices of petrol and diesel by Rs four and two, respectively, it said that fuel prices should be freed from government control.
Analysing the impact of the global financial crisis and the challenges, the Survey said: "The Indian economy has shock-absorbers that will facilitate early revival of the growth."
Suggesting faster reforms in the banking sector, the Survey said the government should amend the laws to align voting rights in banks with equity holdings, besides raising FDI limits.
The suggestions also include phased increase in FDI limits and easier entry of foreign banks and other overseas financial sector entities.
It also made a case for linking interest rates on small savings schemes to debt instruments of the government or rates of bank deposits of similar maturity.
For orderly development of capital markets, the Survey added all financial market regulations should be brought under the purview of the Securities and Exchange Board of India.
High Networth Individuals (HNIs) should be allowed to register and invest directly through authorised Indian investment intermediaries, it said, adding "this will allow ban of indirect ways of investment such as P notes".
On opening of retail sector to foreign investment, the Survey said the government should allow "FDI in multi-format retail, starting with food retailing".
The government, it suggested, may also raise FDI cap in defence industries to 49 per cent from 26 per cent currently, while allowing 100 per cent foreign investment on case by case basis in high technology and strategic defence goods and systems to eliminate dependence on imports.
