February 22, 2006, New Delhi, Press Release

Presenting its pre budget Memorandum to Mrs Vasundhara Raje, Chief Minister, Rajasthan, CUTS International has stressed on the need for simplified tax structures and strong consumer movement to enhance competitiveness of the economy.

“The Government should at one end facilitate business through rationalising rules and regulations and remove difficulties being faced and at the same time, should focus on strengthening consumer movement in the State as an enabling force to enhance competitiveness and efficiencies of the economy,” Mr Pradeep S Mehta, Secretary General, CUTS International said during the interaction.

Mr Mehta said that the next major tax reform for the state Government is to adopt Value Added TAX (VAT) regime which will go a long way in brining in tax rationalisation and revenue generation for the state.Given that most of the neighboring states have adopted VAT, Rajasthan cannot let its businesses in a disadvantageous position.

The forthcoming budget should also announce constitution of State Competition and Regulatory Agency (SCORA) as an autonomous agency to promote efficiency and effectiveness of services in the state. “Consumer abuses being rampant in services such as education, health, transport, entertainment and given that unregulated markets do not provide adequate incentives to better service providers, timely enactment of SCORA is imperative to address these concerns,” Mr Mehta said.

CUTS International also called for setting up a Consumer Directorate under which all departments related to consumer welfare be brought in. A Consumer Welfare Fund, announced last year should also be operationalised and a system be put in place to ensure its smooth operation in objective manner.

Commenting on the power sector reforms, CUTS International stated that aggregate technical and commercial losses of over 40% were causing adverse impact on the entire economy. Attainment of reduction in losses would require the government to invest heavily in electricity distribution and active involvement of consumers in the reforms process. Given this scenario, the government should further invest in the feeder renovation program in rural areas so that not only the losses were reduced, but rural areas get 24hr power supply. A separate fund should also be created for awareness generation and information dissemination across the state with active involvement of consumer groups. It is estimated that 5% conservation of electricity at consumer end would save as much as Rs.400crores for the state.

The state should implement Right to Information Act at all levels in the system. Whereas Rajasthan was the first state to bring in the Act, the implementation of the provisions has somehow not been very effective despite its potential to weed out corruption. Extensive training programs should be chalked out and launched to sensitise government officials at all levels and civil society groups in the state.