With the new UPA Government expected to come out with the full Budget for 2009-10 within 45 days of its formation, economists want it to bring in measures to generate employment opportunities and to boost investment.
While leading economist Meghnad Desai said stimulus packages provided by the Government were not enough, former Chief Economic Advisor Nitin Desai said there is no fiscal space for another package.
Meghnad Desai said, "There is a recession and the packages given by the government were not adequate. The growth rate is not bad but it is not good either. Attention should be paid to unemployment, whatever economic package they come out with."
However, Nitin Desai said there is no fiscal space for another stimulus but it can be in the form of policy changes such as revision of direct taxes to allow greater deduction for calculating corporate tax for investment purposes.
But Meghnad said, "This is not the time for fiscal discipline, but yes, they (the new government) should set a time frame for themselves for coming back to fiscal prudence."
Rajiv Kumar, the Director of research institute ICRIER, said the country does not need another stimulus package, rather the Government should go for structural reforms to improve the investment climate in the country.
In its interim Budget for 2009-10, the Government had come out with third stimulus package cutting excise duty by another 2 per cent and service tax by the same percentage points.
Meghnad said the government, in its Budget, should pitch for economic reforms like land legislation and labour legislation, which would boost investment in the country.
"Economic reforms should be there like Land legislation and labour legislation ... We can't have a disaster like Singur and Nandigram again. So, there is a need for that. Proper regulations for higher education should be there. Rich people can go to foreign universities but poor can't ... So you have to improve on that front," he added.
Focusing on the current growing problem of unemployment, he said the government should come out with a temporary policy of generating employment through increased spending.He also added that now that the Left is not a part of the government, "the Congress should carry out disinvestment and privatisation."
Elaborating on the agenda for the new Budget, the former chief economic adviser said that the first thing the government should do is to boost the corporate investment.
"The first thing that should be done is to find some way of boosting corporate investment. Secondly, the government should continue supporting social schemes and ensure that there is proper delivery as well," he added.
While infrastructure investment should be stepped up, fiscal stimulus in the form of economic reforms should be given. After Lehman Brothers collapsed in mid-September last year, economic growth in India declined to 5.3 per cent in the third quarter of 2008-09 against over 7.5 per cent in the preceding two quarters, prompting the government to announce stimulus measures.
