Towards a single market

There are two proposals in the 2015-16 Economic Survey which are significant for the predominantly agricultural states like Punjab and Haryana. One is the creation of a single market countrywide for farm produce and the scrapping of the state-level agricultural produce marketing Acts. Both Punjab and Haryana earn hefty revenue by taxing agricultural produce brought to the designated mandis. The proposal gives farmers the freedom to sell their produce to anybody anywhere. And the second which the BJP vote bank has persistently opposed is about the opening up of multi-brand retail to FDI (foreign direct investment). This, the survey argues, will strengthen the supply chain for agricultural produce and cut waste of fruits and vegetables. Another bold suggestion in the survey is that the government should dilute its ownership of some banks and exit, which means privatise them. This would invite the wrath of unions and require tactful handling by the political leadership. Government banks frequently run into losses due to bad loans and are given bailouts with the taxpayers' money, while those responsible get away lightly. 
Relying on the questionable estimates of calculating GDP, the survey says India will grow at 8.1 to 8.5 per cent next fiscal and expects rate cuts to fuel growth but rules out big-bang reforms. Those expecting a game-changer budget on Saturday may be in for disappointment. It says the "rising influence of states and institutions restricts the Centre's ability to reform". Finance Minister Jaitley is likely to focus on fiscal consolidation, encourage investment and check leakages in subsidies. The survey sets the medium-term fiscal deficit target at 3 per cent of GDP to maintain India's credibility among foreign investors. 
There is an expectation that Jaitley will boost manufacturing with tax breaks in the backdrop of  Prime Minister Modi’s “Make in India” campaign. The survey, however, cautions the Finance Minister against any sector specific tax relief and draws his attention instead to "Skill India". Since the BJP has talked of “tax terrorism” Jaitley's proposals on taxes will be keenly watched. Will he leave more money in the hands of corporates and individuals?