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|February 23, 2001||Feedback|
Gross fiscal deficit at 5.5 per cent of GDP
The Survey places the Centre's gross fiscal deficit at 5.5 per cent of the GDP on the basis of provisional and unaudited figures, against the budgeted 5.1 per cent.
Real GDP growth rate in 2000-01 is estimated at six per cent, compared with a growth rate of 6.4 per cent achieved in 1999-2000 and 6.6 per cent in 1998-99.
The reduction of overall growth rate to six per cent against the targeted above seven per cent is mainly due to a decline in the growth rates of the services sector, from 9.6 per cent in 1999-2000 to 8.3 per cent in the current year. Among services, it is the community, social and personal services group that is expected to show the sharpest decline.
In terms of growth of value added, both industry and agriculture and allied sectors are expected to achieve higher growth rate than in the previous year.
Industrial growth slowed down to 5.7 per cent in April-December this year compared to a 6.4 per cent during the corresponding period in the previous year. Agriculture and the allied sectors is anticipated to grow by about 0.9 per cent in 2000-01, which is marginally better than 0.7 per cent in the preceding year.
The survey stresses the need to reduce subsidies, target remaining subsidies on the poor and search for more efficient mechanism for protecting the poor. This requires progress in reforming the existing control systems governing the fertiliser, petroleum and sugar sectors.
Talking about downsizing, it says all employee positions which add to bureaucratic controls must be identified and eliminated. For this to be truly effective and sustained, divisions, departments and ministries, whose primary purpose is to control and direct the economy, must be abolished. Once this is done, the government will be forced to become a facilitator of economic growth and investment.
Calling for expediting divestment and privatisation, the survey states that it is necessary to get the government out of the business of production and enhance its presence and performance in the provision of public goods. Governments, with their elaborate bureaucratic structures, multiple layers of accountability and complex cross checks, are unsuited to the demands of commercial production in a competitive, fast growing economy.
The government is examining the feasibility of framing a new industry Act, which will focus on promotion and development of industry, instead of regulation. Other measures to promote restructuring of industry include factor market reforms, an end to any remaining investment controls and provisioning for progressive improvement in infrastructure services.
The survey suggests creation of a special task force to push power sector reforms with state governments in an organised manner.
It says transmission and distribution losses need to be tackled on a war footing to make efficient pricing feasible.