Rajya Sabha MP NK Singh on Tuesday suggested the government to implement a coupon system for providing subsidy to poor, early implementation of the Kirit Parikh committee recommendations on the petroleum sector and rationalisation of the labour laws for to boost growth.
Intervening in the discussion on the general budget, Singh, former bureaucrat and member of the Upper House from Janata Dal (U), also urged the finance minister to constitute an empowered group for reclassification of government accounts to capture capital expenditure adequately. Quoting the budget documents, he said many forms of revenue expenditures are productive in nature, implying that these should be counted toward capital expenditure. This would help the government in paring the revenue deficit.
?There is a case for looking at the Government of India classification in a more pragmatic way wherein more emphasis should be on the end outcomes of expenditure,? Singh, also a former member of the Planning Commission, said. He said the proposal in the Economic Survey 2009-10 to revamp the Public Distribution System, and usage of food coupons would help in managing food inflation and make food sector interventions more effective.
On energy, increase in prices of petroleum products that has led to public protests, he said. ?But considering the sanguine commitment to do away with oil bonds, recognising the limits for cash compensation and limits of cross subsidisation between upstream and downstream oil companies, sooner or later we need to bite the bullet on the recommendations of the Kirit Parekh Report,? Singh added.
He also called for further improvement in agricultural productivity and said budget allocation of Rs 400 crore is ?grossly inadequate? for this purpose. Singh complimented the finance minister for taking initiatives on managing government finances and underlined the need for giving more emphasis on generating revenues. He favoured an independent monitoring system for government plans.
However, Singh cautioned that some of the assumptions made by the FM in budget could turn out to be ?problematic?. ?For instance, the basic macroeconomic assumption of 12.5% growth in nominal GDP is predicated at inflation of just 4% in 2010-11, which to say the least is optimistic. If this turns out to be higher, the nominal GDP would also need to be higher to get to 8%,? he said.
He pointed out that 4% annual inflation rate in the next fiscal could be an understatement. Inflation has already touched 9.89% in February and analysts expect it to cross double-digits in March. He added that its may be difficult for government to achieve disinvestment target on Rs 40,000 crore on an annualised basis.
?Market appetite to absorb Rs 40,000 crore investments every year is problematic. Given the current thinking on the disinvestment strategy where incrementalism eschews strategic sales market may remain subdued,? he said. Singh said the government?s borrowing programme could potentially crowd out private investments.