New Delhi, July 9: Big-ticket reforms can boost the service sector, which remained subdued during the last three years, Economic Survey 2013-14 tabled today said.
Revival of the sector, the survey said, could be achieved through reforms, the speeding up of policy decision making and a targeted approach with focus on big ticket services.
“Some services like software and telecom gave India a brand image in services. While focus on these services needs to be retained to further our lead, the time has come to look at other big-ticket items that have high manufacturing sector and employment linkages,” it stated.
This fiscal seems to augur well for the sector with the expansion in domestic business activity. Over the last three years, the sector has failed to keep pace with the 10-per-cent-plus growth recorded since 2005-06.
Natural gas price
The survey has pitched for the market pricing of natural gas besides restructuring Coal India and allowing private sector participation in mining.
“In the field of natural resources where there is global trading, appropriate incentives for exploration and extraction in India are obtained when there is pricing parity with the world price excluding transport costs or taxes,” the survey stated. There will be “under-investment” if India pays lesser price than the world rate for extraction of minerals.
Last month, the cabinet committee on economic affairs had deferred a decision on implementing the Rangarajan formula for the pricing of domestic natural gas.The formula calls for pricing gas at 12-month average global rates and LNG import price.
The survey also proposes a shift to the revenue-sharing model for oil and gas exploration from the production- sharing method, which will make the government a partner in the risk of exploration.
Coal India restructuring
The survey has recommended the quick restructuring of Coal India to increase output to feed power plants as the country grapples with rising imports. “A bill to amend the Coal Mines (Nationalization) has been pending in the Rajya Sabha since 2000 and its passage needs to be expedited to permit private-sector entry into coal mining,” the survey said.
The survey suggested the payment of subsidy in cash for those below poverty line through technologies such as biometric identification. It observed that the current method had led to distorted resource allocation.