India should aim at zero fiscal deficit - econ survey

A man uses an electronic machine to check a currency note at a money exchange in Siliguri in this May 18, 2009 file photo.

NEW DELHI (Reuters) - India should reduce its fiscal deficit by simplifying tax regime, reforming subsidy policy, and tapping new revenue streams via stake sales in state-run firms and 3G wireless spectrum auction, a finance ministry survey said on Thursday.

Following are some of the reforms that the survey recommends:

ON FISCAL REFORMS

* Examine the possibility of a new target of zero fiscal deficit on a cyclically adjusted basis.

* Reform petroleum, fertilizer and food subsidies to reduce leakages and ensure targeting.

* Phase out kerosene supply-subsidy.

ON TAX REFORMS

* Implement the Goods and Services Tax (GST) from April 1, 2010.

* Review and phase out surcharges, cesses, and different transaction taxes like fringe benefit tax, commodities and securities transaction taxes.

* Give incentive to states to review and phase out stamp duties.

* Introduce a new Income Tax Code for neutral corporate tax regime.

* Rationalize dividend distribution tax.

* Review customs duty exemptions.

* Move to uniform duty structure to eliminate inverted duties.

* Revise specific duties in textile sector.

* Reduce specific duties in the sector slowly to ensure they don't exceed 30 percent ad valorem (duty on value).

ON DISINVESTMENT

* Need to revive disinvestment programme.

* Disinvestment programme can generate 250 billion rupees per year.

* Need to complete the process of selling 5-10 percent stake in previously identified profit-making state-run firms.

* All unlisted state-run firms should be listed and at least 10 percent of their stake should be sold to public.

* All loss making state-run firms should be auctioned off.

* Allow negative bidding in the form of debt waiving in state-run firms having zero book value.

3G AUCTION

* Auction 3G spectrum.

* Allow auctioned spectrum to be free tradable.

* Capital gains on spectrum should be taxed under the Income Tax Act.

ON LEGAL REFORMS

* Introduce legal reforms to eliminate delays and obstacles in speedy completion of trials.

* Carry out systematic review of all old laws and replace them with modern laws.

* Fill vacancies in courts.

* Modernize management of courts, cases and judgements.

ON URBAN DEVELOPMENT

* Introduce radical reform in urban governance.

* Frame urban development policy.

* Amend land acquisition and rehabilitation laws.

* Develop a model of land use policy that is responsive local conditions and environment.

* Review and radically transform urban transport policy and system.