Dr Rangarajan's proposal to put a surcharge on the higher income brackets progressively is a worthy suggestion at the right time; this can be at the threshold of Rs.10lakhs-20lakhs: 3%; >Rs.20lakhs-30lakhs: 5%; >Rs.30lakhs: 10%.
Another progressive measure could be raising the share transaction tax above the threshold level of transactions, say above Rs.2lakhs where the small investor gets incentive to invest and the large investor pays to the exchequer a STT of 1% instead of the present nominal STT. The third measure to reduce fiscal burden would be doing away with the Parliamentarians and legislators getting Rs.5crores to spend in their constituencies through the Constituency Development Fund as most of such spending has been ill-spent as revealed by a number of studies. The fourth area could be to reduce the personal security provided to the legislators only for the Z category. The fifth area could be taxing the Parliamentarians and legislators for non-attendance and for the non-participation in the various standing committees of the Government. These would certainly reduce the fiscal burden of the Government.
The other most important area where subsidies have to be re-engineered is farm sector: Restrict subsidies to the small and marginal farmers so far as input subsidies are concerned. Provide a market stabilisation fund and extend support whenever the prices for farm products fall below the cost of production plus a minimum profit for the farmer. The recommendations of CACP could hold good for this purpose.