Giving a thumbs-up to Indias growth prospects, the economists, who met the minister in his run-up to Budget exercise, sought a cut in the customs duty rate.
The common recommendations included rationalisation of direct and indirect taxes so that the combined Central and state taxes could be brought down to around 20% in a phased manner from the present level of 28.5%.
They also pointed out in the meeting that regulatory and policy issues need to be sorted out to accelerate infrastructure growth. They sought steps to improve the coal-mining sector, as it was key to the countrys growing energy requirement.
Sources also said that the economists suggested the government should use the buoyant growth in tax revenues beyond the budgeted amount for cutting down its market-borrowing programme. D K Srivastava, director, Madras School of Economics said, In the medium-term, the country can achieve 9-9.5% growth rate given that the domestic savings rate is projected to rise to 39% from 34%.
It was also suggested to the finance minister that the government would have to increase public sector investment in the infrastructure sector from around 4% of GDP to 6-6.5% in the Budget, besides encouraging private investment in this sector.
Saumitra Chaudhuri, Economic Advisor, ICRA, said, The finance minister was really keen on continuing the protection given to the industries, as according to the minister these things have worked very well in certain cases like car assembly; and also making available better securities in the market.
He further added, The issues that were discussed focused mostly on FRBM issues, the need to cut fiscal deficit, keep a strict vigil on government expenditure and specially re-examine the issue of subsidies.
The additional expenditure incurred in a deficit situation should be limited to capital-intensive sectors such as infrastructure, education and health, the economists said.
Some of the economists also sought to speed up reforms in labour, insurance and pension sectors to raise investment in the manufacturing and service sector.
The issue of projected revenue loss through tax concessions in special economic zones was also raised in the meeting.