{"id":303933,"date":"2024-07-09T19:29:20","date_gmt":"2024-07-09T13:59:20","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=303933"},"modified":"2024-07-09T19:29:20","modified_gmt":"2024-07-09T13:59:20","slug":"fiscal-prudence-and-economic-reforms","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/fiscal-prudence-and-economic-reforms\/","title":{"rendered":"Fiscal Prudence and Economic Reforms"},"content":{"rendered":"

Source-<\/strong>This post on Fiscal Prudence and Economic Reforms has been created based on the article \u201cBudget: Balance fiscal prudence with support for GDP expansion\u201d<\/strong> published in \u201cLive Mint\u201d<\/strong> on 9 July 2024.<\/p>\n

UPSC Syllabus- GS Paper-3<\/strong>– Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.<\/p>\n

Context-<\/strong> The government aims to prioritize a productive workforce and enhance the competitiveness of Indian products and services in its third term. The Union Budget must strike a balance, creating fiscal room to support these goals while maintaining fiscal consolidation. The Confederation of Indian Industry (CII) has aligned its recommendations with these priorities.<\/p>\n

What are the issues faced by the central government?<\/strong><\/h2>\n

1) Setting achievable disinvestment targets is challenging because outcomes depend on unpredictable market forces.<\/p>\n

2) The Centre’s gross tax revenue has stabilized at approximately 11.5% of GDP over the past four years. However, as per the 15th Finance Commission, India’s overall tax collections are estimated to be about 4 percentage points lower than their potential.<\/p>\n

What are the major recommendations given by Confederation of Indian Industry (CII)?<\/strong><\/h2>\n

1) Fiscal Consolidation-<\/strong><\/p>\n

A) Revive the practice of publishing medium-term deficit indicators in the Union Budget for better fiscal planning visibility.<\/p>\n

B) Review and update the Fiscal Responsibility and Budget Management Act, as recommended by the 15th Finance Commission.<\/p>\n

C) Establish a robust fiscal framework to enhance India’s credit rating.<\/p>\n

2) Increasing Healthcare and Education Spending Targets <\/strong>-There is a pressing need to raise government spending on healthcare to 3% of GDP and on education to 6% of GDP by 2030-31.<\/p>\n

3) Boosting Capital Spending with RBI Dividend Allocation<\/strong> -It suggests allocating a portion of \u20b92.1 trillion dividend from the Reserve Bank of India to boost capital spending by 25% from 2023-24 levels. This will sustain growth in public capital expenditure and stimulate private investment.<\/p>\n

4) Disinvestment & Asset Monetization-<\/strong><\/p>\n

A) Adopt a demand-based approach to select public sector enterprises (PSEs) for divestment.<\/p>\n

B) Enhance the government’s asset monetization program by aiding ministries and state governments in identifying assets and refining regulatory execution.<\/p>\n

C) Establish a dedicated cell in Niti Aayog or the Ministry of Finance to oversee these efforts.<\/p>\n

D) Utilize proceeds from disinvestment and asset monetization to either reduce debt or develop new assets.<\/p>\n

5) Taxation Reforms-<\/strong><\/p>\n

A) CII proposes a three-rate GST structure with lower rates. Simplifying tax structures and improving the ease of doing business would boost tax buoyancy.<\/p>\n

B) They advocate including petroleum products and electricity under GST to reduce business costs by enabling input tax credit on commonly used goods and services.<\/p>\n

Read More-<\/strong>7 years of GST<\/a><\/p>\n

6) Enhancing Competitiveness Through Customs and Tax Reforms-<\/strong><\/p>\n

A) It suggests announcing a phased plan to adjust duty rates, allowing domestic manufacturers time to adapt.<\/p>\n

B) It recommends improving compliance procedures, dispute resolution, and grievance redressal.<\/p>\n

Question for practice<\/strong><\/p>\n

What are the major recommendations given by Confederation of Indian Industry (CII)?\u00a0 <\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Source-This post on Fiscal Prudence and Economic Reforms has been created based on the article \u201cBudget: Balance fiscal prudence with support for GDP expansion\u201d published in \u201cLive Mint\u201d on 9 July 2024. UPSC Syllabus- GS Paper-3– Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment. Context- The government aims to… Continue reading Fiscal Prudence and Economic Reforms<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,167],"tags":[216,8184,10501],"class_list":["post-303933","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-economy-subject","tag-gs-paper-3","tag-indian-economy","tag-live-mint","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/303933","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=303933"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/303933\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=303933"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=303933"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=303933"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}