Union Budget 2012-13: Pointers to the Budget

Every year, Economic Survey raises lots of hopes of bold reforms that get dashed the very next day when the Budget for the year is presented. This year's Survey, too, talks of several desirable measures. Out of them, only a few may be feasible:

Cutting Out Middlemen

The Survey points to the five-fold gap between the price at which a farmer sells his produce and the price at which the final consumer buys it. It recommends changes in the Agricultural Produce Marketing Committee to cut down middlemen's margin.


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Take The Frbm Route

Although revenue and fiscal deficit targets will be missed this year, a new FRBM framework can help the government achieve fiscal consolidation in the medium-term.

Get Foreigners Into Multi-Brand Retail

The government can overcome political opposition by allowing a “phased” rollout of multinational stores in metros.

13% is the desired ratio of tax to GDP by 2016-17. To achieve this target without raising tax rates, the government will have to further tighten the tax regime.

For BOP'S sake

Discourage unproductive imports by raising duties on gold and consumer goods.

Stock lending

Vibrancy in securities lending and borrowing can provide more depth to market by permitting short selling, which can be covered through borrowed stocks.

Invite Competition In Coal Mining

CIL’s monopoly has resulted in supply bottlenecks, delayed development of new fields and discouraged cost reduction. It is time the government opens up the sector to competition.

Fix Diesel Pricing

It is time for reforms in diesel pricing. The government can make a beginning by fixing per litre subsidy on the fuel.

Build A Buffer

A countercyclical financial policy can reduce negative impact of financial risks.

Develop Bond Market

There is too much reliance on bank credit and equity. A developed bond market will reduce this dependence.