Voicing concern over slow pace of reforms, economists on Friday wanted Finance Minister P Chidambaram to give new thrust to contain fiscal deficit, carry forward tax reforms and encourage foreign direct investment to push up growth and employment generation.
At a customary pre-Budget meeting with the finance minister, economists said the government should give top priority to fiscal consolidation and phase out tax exemptions to boost revenue mobilisation measures as not much tinkering could be done to tax rates.
ICRA Economic Advisor Saumitra Choudhuri said: "We need to continue fiscal consolidation, both at the Centre and states. Exemption should be kept under control, while customs duty should be reduced in a phased manner."
During the meeting, Chidambaram elicited suggestions from economists on the measures that needed to be taken to encourage job creation and focus on rural development.
Nagesh Kumar, director general of Research and Information System of Developing Countries, said the Budget should provide strategic direction to make India a manufacturing hub of the world.
Emphasis on manufacturing would boost employment generation, Nagesh Kumar said, adding the Budget should move beyond tax incentives and credit for research and development. "We should also move to providing subsidies to R&D as is done by the developed world."
He also called for measures to boost export-oriented industries and liberalisation of FDI regime to push up employment generation.
He said measures should be initiated to tap the export potential of FDI.
Suman Bery, director general of National Council of Applied Economic Research, said since Budgets of state governments and the Centre are constrained, economic activities should be deregulated to boost employment.
He said non-farm employment in rural areas should be generated by deregulating economic activities to ensure participation of small units.
Others who participated include Kavita Rao of think-tank NIPFP and Centre for Policy Research director Pratap Bhanu Mehta.