Pranab Mukherjee with a group of economists in New Delhi on Wednesday. (PTI)

New Delhi, Feb. 1: Leading economists today urged finance minister Pranab Mukherjee to quicken tax reforms, check fiscal deficit and introduce policies to revitalise the economy.

“The budget has to make a strong policy statement. Show the world that the government is serious on fiscal consolidation and that the fiscal deficit will be reduced,” Ficci secretary-general Rajiv Kumar said after the pre-budget meeting of the finance minister with economists.

In the last budget, the government had projected the fiscal deficit — the gap between expenditure and receipts — to fall to 4.6 per cent of the gross domestic product (GDP) in 2011-12 against 4.7 per cent in the earlier fiscal.

However, there are fears of a slippage in the deficit target on account of lower tax mop-up, ballooning subsidy bill and lower divestment proceeds.

Prime Minister’s economic advisory panel member M. Govinda Rao said the deficit in the current financial year could overshoot the target by 1 per cent to around 5.6 per cent of GDP.

Economists said the government should speed up the tax reform process.

The government is slated to implement reforms in direct and indirect taxes. Bills on the Direct Taxes Code (DTC) and the Goods and Services Tax (GST) are currently with the parliamentary standing committee.

Economists also asked Mukherjee to speed up policy reforms and implement its decision to allow foreign investors in multi-brand retail. The government recently hiked the foreign direct investment in single-brand retail to 100 per cent.

They also suggested the decontrol of diesel, higher excise duty on diesel cars and the use of cash transfer system to distribute subsidies directly to the beneficiaries.

Concerned over the slowing economic activities in the country, they also urged the government to take steps to encourage investments.

Some economists also suggested the extension of Section 80(i) of the Income Tax Act for at least another three years to bring investment in infrastructure.

The global economic slowdown and high interest rates have impacted the economic climate in the country leading to lower GDP growth in the first half of the fiscal.

Mukherjee told the economists that the economy might expand over 7 per cent in 2011-12 and inflation could ease to 6-7 per cent by March-end. “The current year was a challenging one as we had to face the problem of inflation, fiscal deficit and maintenance of sustainable and inclusive growth,” he said.