NEW DELHI: Economists have urged Finance Minister P. Chidambaram to step up reforms by containing the fiscal deficit and giving a boost to foreign direct investment inflows. Calling for fiscal consolidation and rationalising of expenditure in the latest meeting on Friday in the series of pre-budget consultations, they underlined the need to continue the impetus in tax reforms in direct and indirect taxes

The economists also proposed that improved corporate governance be included as an objective in formulating tax policies relating to taxation of capital market instruments such as the issue of dividends in the hands of recipients. They were in favour of phasing out tax exemptions to boost revenue mobilisation steps. However, on the fringe benefit tax, they suggested that the experience gained during the past year could be used for better implementation.

Among those who attended the meeting were ICRA Economic Advisor Saumitra Choudhuri, the Director-General of Research and Information System of Developing countries (RIS), Nagesh Kumar, the Director-General of the National Council for Applied Economic Research (NCAER), Suman Bery, Centre for Policy Research Director Pratap Bhanu Mehta and Kavita Rao of the National Institute for Public Finance and Policy (NIPFP).

Suggestions made at the meeting included proposals to give a strategic direction to manufacturing to boost employment levels and make this country a global production hub. There was also need to provide subsidies for research and development at much higher levels on the lines of developed countries, it was felt.

Some economists suggested that the FDI regime should be liberalised to increase employment opportunities. Others felt that non-farm employment in rural areas should be generated by deregulating economic activities to ensure participation of small units.

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