Standing Committee on Finance Recommendations

The Standing Committee on Finance has proposed that the government develop an action plan to evenly distribute industries across all states to ensure balanced and equitable economic development.

Disinvestment and Public Sector Enterprise (PSE) Policy

• The Committee noted the stagnation in the Government’s disinvestment plans, emphasizing the need to enhance the investment rate in India.
• It highlighted the PSE Policy, aimed at privatizing or closing loss-making public sector companies in non-strategic sectors to promote fiscal prudence.
• The Committee recommended accelerating the PSE Policy's implementation, urging quicker identification and approval for disinvestment or closure of non-strategic CPSEs.

State Incentives and Investment Rate

• The Central Government provides states with incentive packages for undertaking similar reforms for their state-level PSUs.
• The Committee suggested revisiting the incentive packages to make them more attractive and effective for states.
• It emphasized the need to increase the investment rate to 35% of GDP from the current 31% to achieve a growth target of 8% annually for a decade.

Fiscal Reforms

• Recognizing the challenges of financing investments in the current global environment, the Committee recommended tailored fiscal reforms for highly indebted States.
• This aims to improve states' fiscal health while maintaining their capacity to invest in critical infrastructure and social development.