Major Recommendations

1. India must double Real Per Capita income in 8 years through a process of sustained growth.
2. Poverty Head Count ratio must be shifted from 28% to 20% through creation of adequate job opportunities.
3. Rural Urban divide must be addressed through initiatives such as Bharat Nirman.
4. A strong movement towards universal elementary and secondary education via a common school system provided primarily by the government is critical.
5. Rise in literacy rate from 65% to 85% will aid employability.
6. Restructuring of higher of higher education, vocational training and skill development systems under private sector initiatives must be considered.
7. Effective social security programmes for the unemployed must be put in place.
8. Power generation capacity expansion of 60,000 MW shoul commonce.
9. The end of the 11th Plan must position Indiaas a global source of goods, services and knowledge.

 Suggestions to maximize tax revenue

1. Widen tax base- Bring more services in the tax net.
2. Incentivise savings for infrastructure products- issue infrastructure bonds. Investments in the infrastructure bonds should be tax exempt.
3. PSU disinvestments and privatization- sell all PSUs sick over a certain time: privitize all PSUs making losses for a certain number of years: bring down shareholdings in profitable PSUs; sell high value unproductive assets of PSUs
4. Increase expenditure efficiency and productivity- ensure minimal leakages, reduce corruption through stringent action: adhere to timelines:prevent cost overruns through on-the-ground surveys; outsource service delivery to private sector.
5. Raise external debt5 to GDP ratio through long term borrowings:raise commercial loans.
6. Reduce subsidies- Redirect non-merit subsidies to productive capital formation in agriculture.
7. The government must not compromise on adhering to FRBM targets during Budget 2007-08and the 11th plan.

 Strategies for first year 0f 11th five year plan

Invest in Human Capital: Public funds must be designated to commence a common school system for primary and secondary education. Private investments need to be inceintivized into vocational training and skill development.

Invest in Physical Infrastucture: Gross Capital Formation in infrastructure should touch 11% by 2011-12 with the first incremental step to be taken in Budget 2007-08. Infrastructuree Development Boards need to be established at the central and state levels as a one-stop fast track window for executing projects.

Deepen Financial Capital: The government must give utmost priority to FRBM targets and reduce government dissavings. Policies to deepen corporate bond markets, carry out pesion reforms, movements towards privitization of banks and changes in withholding tax must be announced and initiated.

Improve Agriculture: Rapid growth in the agricultural sector can come only from linking it to value addition and markets. Vibrant agricultural markets must be promoted through enactment of the APMC Act in states, private participation in Mandis, direct marketing, contract farming and other measures for more liberal operations. Public investment is required in irrigation and water management through participatory community efforts.

 Direct Taxes

1. Corporate taxation: Reintroduce Section 80 M which provides for the deduction in respect of dividends received from another domestic company to the extent of dividends which are in turn distributed by the recipient company.
2. Reduce distribution tax on dividend from 14% to 5%.
3. Provide an exemption/ tax credit while computing distribution tax on dividend distributed by subsidies to parent, which has earlier suffered distribution tax.
4. Fringe Benefit Tax (FBT) to be abolished or the choice to be given to tax paying firms to pay 1 percent additional corporate tax on its annual income in lieu of FBT.
5. Surcharge on Income tax for domestic companies - which was raised to 10% - should be removed.
6. Raise depreciation rate from 15% to 25% provided the same rates or higher rates are charged by corporates under the Companies Act.
7. Weighted deduction of 150% to be given on all expenditure made by corporations for promoting supply of natural renewable resources like bio-fuels, agro-forestry, and medicinal hebs.
8. Eliminate wealth tax, as the collection is less than administration expenses.