Eastern states' should contribute to GDP growth target: Debroy

Chairman of the Economic Advisory Council to the Prime Minister Bibek Debroy Friday said the eastern states should contribute by raising their growth rates to meet the nominal growth target of 11.5 per cent to 12 per cent.

He said if the target of USD 5 trillion dollar economy, as set in the Union budget, was to be met by 2024, the aggregate growth rates of the states would have to rise.

"The aggregate growth rates of the states should be sustained in the range of eight to nine per cent," Debroy said at a seminar organised by the Swadeshi Research Institute and the Dr Syama Prasad Mookerjee Research Foundation here.

If the participation by the women workforce is increased along with other factors, the growth rates of eastern states would easily raise from the present six to 6.5 per cent to 8.5 per cent, the economist said.

He said the nominal growth target of 11.5 to 12 per cent was based on the premise that the current account deficit (CAD) to GDP ratio was two per cent, inflation rate four per cent, combined deficit of the states and the Centre six per cent and the real rate of growth eight per cent.

With the rising tide of protectionism across the globe, it does not appear that net exports would be a major contributor in the growth process, Debroy said.

"It is also important the savings and investments need to increase," he said adding that the government should not crowd out private investments.

He said the primary call on the utilisation of scarce government resources must be on the disadvantaged people, and certain areas of physical and social infrastructure.

Terming that the GST was work in progress, Debroy said there was a need to streamline and reduction in rates as well as bringing in more items under the new tax regime.

He said there was a need for reforms in the direct taxes as well.

"There is need for reduction in compliance costs of paying taxes and also the human interface to eliminate corruption," he said.

Debroy said recommendations of the 15th Finance Commission under the chairmanship of N K Singh was expected to be submitted by the end of the year.

In future, he said, budgets would increasingly become irrelevant and would only be an annual statement of government receipts and expenditure and Part A and Part B of the finance minister speech would have no place in it.