29.9.12

Kelkar's prescription


The government should step up the process of stake sale in state run firms, sell minority holdings in Specified Undertaking of the Unit Trust of India (Suuti), Hindustan Zinc and Balco, and take steps to monetize under-utilized land resources of public sector enterprises, port trusts and railways, a panel set up to chart out the roadmap on fiscal consolidation said.
The panel headed by former finance secretary Vijay Kelkar also outlined a series of policy steps to repair the battered public finances and help promote growth against the backdrop of a difficult global situation. The committee examined various measures which are needed to be undertaken by the government for fiscal consolidation in the medium term. These include raising the tax-to-GDP ratio, policy measures for pruning expenditure on subsidies and other items of expenditure, rightsizing of plan support, and steps for increasing disinvestment proceeds. The report said an additional source is the disinvestment of minority government equity stakes in private entities, such as the holdings in Suuti, HZL and Balco.
The panel said that over the next 24-36 months, there is yet another policy instrument for raising resources for development and that is monetizing government’s unutilized and under-utilized land. These resources can finance infrastructure needs in urban areas.
The panel also said central public sector undertaking holding large cash balances should be urged to look for sound investment in key area.  It said that in the base year of 2012-13, it is possible to achieve a fiscal deficit target of 5.2% with various policy initiatives, which involve limiting expenditure on subsidies, meeting the tax receipts and disinvestment targets set at the budgetary estimates stage and effecting savings in plan expenditure by rationalizing expenditure.

THE KELKAR ROAD MAP
Suggested measures for fiscal consolidation
DIRECT TAXES
Complete review of Direct Taxes Code Bill, 2010 before it is implemented to plug revenue losses
Set up a datawarehousing and datamining unit for tax profiling
Make quoting of PAN or UID mandatory in all economic transactions
Set up a Directorate of Risk Management within IT department for improving tax administration
All pending refunds should be issued at the earliest
Create a national portal to help taxpayers file applications seeking rectifications and appeal
A 360 degree profile of all tax paying individuals and institutions should be created to help decrease tax evasion and tax fraud
INDIRECT TAXES
Union excise duties and service tax must be reformed for smooth integration into GST
Negative list of services introduced in 2012-13 budget should be reviewed for further pruning
CBEC should put in place robust information system to increase the deterrence level and the cost of evasion
Expedite the implementation of GST
DISINVESTMENT
Disinvestment of minority government stake in private entities such as holding in SUUTI, HZL and BALCO
Expedite sound investment in key areas for cash rich PSUs. If it is unable to identify suitable investment outlets then the govt should call for a special dividend
Monetize govt’s unutilised and under utilised land resources such as prime lands of PSU’s, port trusts, railways
OTHERS
Raise the tax-to-GDP ratio
Policy measures for slashing expenditure on subsidies and other items of expenditure
Rightsizing the size of plan support Panel seeks revamp of tax administration Move Aimed At Improving Compliance

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