June 01, 2014
Abstract: Ahead of the Budget for 2014-15 (the first budget of the NDA Government after the 2014 election), fiscal initiatives have been recommended in five critical areas:
- Ensure transparency by putting an end to window dressing and cash-based accounting system;
- Cap on subsidy. Have an explicit cap on the total subsidy bill (in terms of percent of GDP, say 2%) to insulate the government from political pressures to compromise fiscal responsibility;
- Swap assets. The existing government owned assets–disinvestment, spectrum etc–for creation of new infrastructure assets, instead of following the Consolidated Fund of India route;
- Legislative changes. Make legislative changes to introduce GST and direct taxes code (DTC). Besides, the FRBM Act that terminated in 2010 should be revived;
- Direct transfer. Streamline transfers by fine-tuning, strengthening and expanding the ‘direct benefit transfer scheme’, which is perhaps the best solution to stop large scale leakages.
Keywords: fiscal; GST; Direct Tax code (DTC); FRBM Act; Direct Benefit Transfer (DBT); subsidy; infrastructure