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High lights of recommendations on macroeconomic policies

 
 

•Restore Budget Equilibrium

–Formulate a more realistic budget, keeping in view the downside.

– Keep public expenditure growth below the revenue growth rate Evolve a balance between the revenue budget and the ADP so that the private sector may make greater contribution to the incremental investment.

–Maximise use of foreign aid by designating project aid endowed projects as the 'hardcore' development expenditure.

–Put a cap on growth of "salary and allowances" in real terms.

–Prepare budget (revenue receipt and expenditure, development outlay and private investment) based on a three year projection programme.

–Undertake impact analysis of the current subsidy package.

–Develop a Policy for guiding of mid-term changes in price of public utilities.

•Strengthen the domestic resource mobilisation effort.

–Sustain and improve the current drive to broaden the tax net through effective use of PSI, LTU, TIN and other institutional measures.

–Broaden the direct tax base through various identification measures.

–Improve the contribution of non-NBR components of revenue receipts.

cStreamline non-tax sources of revenues.

•Constitute immediately a Public Expenditure Review Commission to, inter alia, improve fiscal transparency and efficiency of public resource use.

•Enact, as soon as possible, a Fiscal Responsibility and Budgetary Discipline Act for incorporating time bound fiscal deficit targets, limits on public borrowing and public debt.

•Prepare a Government Securities Act to develop a secondary market for government's saving instruments.

•Develop a package to contain the deterioration in the BOP.

–Introduce immediate demand side measures for controlling import-intensive public expenditures and consider imposition of time-bound ad hoc tariff measures based on a detailed commodity analysis.

–Arrange stand-by facilities for oil import and other BOP supportive grant/loans.

–Reschedule payments under IPP, PSC and suppliers' credits.

–Pursue active exchange rate management.

–Improve efficacy of official channels of receiving foreign remittances.

•Strengthen the role of Ministry of Finance in maintaining budget discipline and expenditure commitments. This is being suggested in view of marginalisation of the MOF in areas such as contracts for power and gas purchase, defence purchase, etc.

•Create a Ministry of Economic Affairs by merging the ADP preparation and approval process with the current activities of Ministry of Finance. Planning Commission may continue to function as a strategic think-unit under the Prime Minister's Office.

•Sequence dynamically other structural reforms to provide collateral support to improved budgetary management. The priority areas for reform are the financial sector, SOEs, public administration, local government, trade, energy, telegraph & telephones, etc.