NEW DELHK(PTI): The Indian government announced its intention on July 2to further deepen the reform process and reduce the central fiscal deficit to 3% of the GDP by 199697 and gradually bring down average customs Tarff to 25%.
Ina discussion paper brought out on the completion of two years of the Narasimha Rao government, the finance ministry said reduction in budgetary support to public sector enterprises and better targeting and cul in subsidies would be needed 10 pee the fiscal deficit at 3%, Spelling out the specific items on the reform agenda to achieve six or seven percent annual growth rate, the government promised a comprehensive reform of the financial sector, restructuring the public sector, changing the monopolistic nature of infrastructure sector particularly the state electricity boards and suitably revising the pricing and distribution strategy.
The paper titled “Economic reforms two years after and the task ahead” said the combined fiscal deficit of the center and states would be reduced from about Seven percent of GDP in 199394 to around five per cent in 199697 and of the center to three percent.
This, the paper said, would necessitate an overhaul of approach towards administered prices and user charges and tightening of procedures to contain the growth of public expenditure to 50% from the present 110%. Conveying the government’s re solve to restore the health and long term viability of the banking system, the paper envisaged complete ban on generalized loan waiyrs, improved recovery and racy Cling of public savings. The overall strategy of the financial sector reform would be to increase the bank’s profitability and phased reduction in Statutory Liquidity Ratio (SLR) 10.25% and in Cash Reserve Ration (GRR) to 10%, The government Proposed 15 strengthen institutions and procedures for bank Supervision, phase OUL ceilings and floors on bank deposit and lending rates and make a wide choice of instruments accessible to the public and to producers.
The government would continue with the process of reduction in the rates of personal and corporate income tax and move towards full-fledged Value Added Tax (VAT),
The paper sought to allay the fears of foreign direct investments swamping the country economy and said their proportion in total industrial investment would remain small less than four percent even if private foreign investment reached one million dollars by 199596.
Article extracted from this publication >> July 9, 1993
