Ahead of the Budget 2009-10, today finance minister presented Economy Survey in the parliament. The economic survey today suggested tax cuts and increase in government expenditure as part of another stimulus package to help the economy overcome the global shock.

“The uncertainty surrounding the macroeconomic developments world over in 2009-10 and the need for minimizing the second round impact of the global shock calls for a continued fiscal policy stimuli,” said the Economic Survey for 2008-09 tabled in Parliament today. Finance Minister Pranab Mukherjee today said the monsoon would be normal and with luck the country could surpass the GDP growth target of about 7 per cent.

The survey said the next round of stimulus could include both tax cuts and increase in government expenditure.

Here EquityPandit.com found some key Highlights of the Survey:

Foreign Direct Investment reforms:

- Allow 100% FDI in health, weather insurance

- Raise FDI in insurance to 49% 

- Allow FDI in multi-brand retail 

- Raise the FDI limit for defence production companies to 40%

Disinvestment Process:

- Set disinvestment target at Rs 25,000 crore per year

- Start by selling 5-10% of profitable non-navratnas

- List unlisted public sector undertakings

- Auction loss making public service undertakings

- Offload at least 10% equity in PSUs

Tax reforms:

- Rationalise Dividend Distribution Tax 

- Remove Commodity Transaction Tax, Securities Transaction Tax, and Fringe Benefit Tax 

- Phase out tax surcharge, cess, and transaction tax 

- Introduce new income tax code

On fertilisers:

- Decontrol sugar and fertiliser industry

- Cut oil, fertiliser, food subsidy leakages
- Convert producer subsidies into direct consumer subsidies

On telecom:

- Auction spectrum and make it freely tradable
- Separate telecom licenses from spectrum allocation

Pharma booster:

- Remove price control on all drugs

On fuel:

- Limit LPG subsidies to 6-8 cylinders per year

- Oil subsidy only to non-electrified, non-LPG homes

Others:

- Link small saving rates to gilt and bank deposits
- Review customs duty exemptions
- Eliminate inverted duty structure