Click here to download the Kelkar Committee report.
According to the report, Indian economy is headed for a "perfect storm" worse than 1991 because government's cashflow by March 2013 is threatening to be Rs 110,000 crore (Rs 1,100 billion) more in the red than the expected Rs 500,000 crore (Rs 5,000 billion).
The Kelkar Committee, which was appointed by Finance Ministry to suggest a roadmap for fiscal consolidation, has suggested immediate hike in fuel prices and complete deregulation of diesel prices by start of 2014-15 fiscal.
The Kelkar Committee has recommended sharp reduction in subsidies on petroleum, food and fertiliser, which the government said was contrary to its policy of protecting the poor.
The reforms proposed by the Kelkar Committee have wide ranging implications on the impact of tax on individuals.
While it is uncertain how much of the impact of The Kelkar reforms will be felt in the near term, over the next few years tax reforms are likely to move broadly in tandem with what has been suggested.
India's short-term problems should not obscure the necessary changes for long-term fiscal stability.
While many experts said the suggestion would go a long way in bringing down the annual food subsidy expenditure, they doubt the feasibility of the idea.
The Vijay Kelkar committee has cautioned that India's current account deficit (CAD) might rise to a record 4.3 per cent of gross domestic product (GDP) in 2012-13 if reforms to address this do not take place.
The strategy to achieve the target would be to maximise revenue collections and control expenditure, Chidambaram said, while seeking support of the political parties to deal with economic and financial problems facing the country.
India had a transition from 'socialism with a limited entry to marketism without exit'.
One hopes that the government will act on the Kelkar panel recommendations.
Hopefully, the budget will see tax exemption on pension plans go up to Rs 20,000 from the present Rs 10,000, as recommended by the Kelkar committee.
The approved 2005-06 plan outlay for the IA has been fixed at Rs 911.73 crore (Rs 9.117 billion), of which Rs 325 crore would go for purchase of these aircraft.
Terming the ambitious eight per cent Tenth Plan growth target as achievable, President A P J Abdul Kalam on Monday indicated that the Budget would restructure the tax system on the basis of the roadmap laid out by the Kelkar Panel.
Strongly opposing Kelkar Committee recommendations relating to tax on agriculture, Haryana Chief Minister Om Prakash Chautala on Monday said farmers were the highest tax payers in the country.
"In rural India, even minimal infrastructural facilities are not available for farmers. It is unthinkable to impose a tax on agricultural income, says Rajnath Singh
But the party favoured most of the proposals on indirect taxes.
Stung by widespread criticism within the ruling Bharatiya Janata Party, Kelkar Committee on tax reforms is expected to submit watered down final reports on direct tax and indirect taxe
Planning Commission, on Thursday, expressed reservations on Kelkar Committee proposal to bring processed foods under excise duty net saying it will badly affect growth in the sector.
Stepped up public expenditure must be accompanied by focused policies, advises Vinayak Chatterjee.
While the PM sees zero tax on long-term capital gains and dividend income as unfair since the beneficiaries are not poor, he is silent on the fact that rich farmers too don't pay taxes, since farm income is tax-free, a loophole exploited by many netas and babus, says Debashis Basu.
'The procurement cycle still consumes too much time; little has changed.'
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