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| 'Measures on disinvestment, tax reforms likely in Budget' |
| Press Trust of India / Mumbai Feb 09, 2010, 17:49 IST |
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The government may announce measures on tax reforms and disinvestment in PSUs among others, besides stepping up efforts for fiscal consolidation in the forthcoming Budget, a top economist said today.
"You may see encouraging signs of fiscal consolidation, tax reforms, disinvestments and a further push on infrastructure investment (in the Budget)," Morgan Stanley Chairman Stephen S Roach told reporters here.
Finance Minister Pranab Mukherjee is slated to present the Budget on February 26.
Noting that the government has already initiated steps on PSU disinvestment to mobilise funds through share-sale of state-owned entities, Roach said, moving ahead there was likely to be more such initiatives.
"We will see more of such announcements coming (on PSU disinvestment)," Roach said.
The economist also said he expects some measures to support the struggling farm sector in the Budget.
Fiscal consolidation is also likely to be a major priority of the Government and measures to hold-off the huge fiscal deficit, which is estimated at 6.8 per cent in FY 10, are also widely expected.
Referring to the infrastructure constraints in the country, Roach said India would have to steadily raise the share of investments to develop roads, ports and railways to improve the nation's growth prospects.
"The share of investments (in infrastructure) has gone up. It needs to go up further," Roach said.
As per the government estimates, India requires fresh infrastructure investment of USD 500-billion over the next five years.
Roach was optimistic about the increasing share of the services sector to national growth but said the IT-enabled services segment still remained small and needed to be scaled-up.
On the global economy, he said markets are expected to remain shaky on account of the global financial turmoil. He observed that unemployment continues to be a major concern in the US.
Noting that Asian markets were heavily dependent on external capital flows, he termed the excessive dependence on foreign fund flows as a risk to the domestic economy.
The Government and RBI had announced several steps to support the economy which was severely hit by the global economic crisis. While the Government rolled-out two stimulus packages, the RBI slashed its key rates several times since October 2008.
However, with India's economic growth on an upward trajectory, the apex bank upped the cash reserve ratio limit by 0.75 per cent in two tranches to 5.75 per cent.
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