New Delhi, July 9
The Economic Survey for 2013-14 has advocated tough reform measures, including cutting down on food and fertiliser subsidies, broadening the tax base, curbing the fiscal deficit and controlling inflation to fix the economy.

Coming a day before the maiden Budget of the Modi government, the annual report card of the country’s economy tabled in Parliament by Finance Minister Arun Jaitley, pegged a higher overall growth of 5.4-5.9% for this fiscal. The survey has identified the problems plaguing the economy but it remains to be seen if the government can follow the tough prescription offered in the document.

The survey has called for a revamp of UPA’s flagship schemes like the NREGA “to prevent its misuse and make it a development-oriented programme creating meaningful and tangible assets”.

“The newly-released Economic Survey shows the gravity of the economic situation that needs correction," said Jaitley. "Inflation needs to be moderated further. The fiscal deficit needs downward correction over the next two years," said the Finance Minister.

Apart from the economic overview, the survey is read for pointers to the Budget. This year’s survey says the defining challenge is that of generating employment and growth. For this, reviving investments is essential.

The document suggests a three-pronged strategy to achieve this. The government must ensure low inflation by putting in place a framework of monetary policy, fiscal consolidation and food market reforms. On food reforms, it suggests creating a conducive environment for a competitive national market for food which would allow farmers to store and sell farm produce. Also, lower inflationary expectations would increase domestic household savings.

The survey advocates putting public finances on a sustainable path. “India needs a sharp fiscal correction, a new Fiscal Responsibility and Budget Management (FRBM) with teeth, better accounting practices and improved budgetary management.

It notes that both tax and expenditure reforms are needed to obtain high quality fiscal adjustment. The tax regime requires a GST, DTC and a better tax administration. The expenditure reforms require shifting subsidy programmes from price distortions to income support.

In addition, there is a need for overhauling regulatory structures to put in place legal foundations of a well functioning market economy.

The implementation of a central GST could be the first step towards the GST. Once the central GST is implemented and the information technology system has worked, it will be easier for centre and states to move to GST.

The survey said there is a need for revamp or reorganisation of some of the ongoing social-sector schemes, including the National Rural Livelihoods Mission (NRLM), National Rural Health Mission (NHRM) and Sarva Shiksha Abhiyan (SSA).

The survey said that despite huge outlays, most schemes have not achieved desired results. “A mere mark up each year for existing programmes or starting some new ones will not suffice”, it said. "The outlays for the different schemes have not often translated fully into outcomes owing to the poor delivery mechanism," it said.