Chandigarh: Former Union finance minister Manmohan Singh on August 2 stressed the need for immediate initiation of fiscal correction process including reforms in the tax system and ensuring more returns from the public sector.

"The country will not grow, nor can it be sure of stability unless the fiscal correction process is initiated immediately," he said, addressing a seminar on the theme 'Development of Indian economy: the post-reforms scenario,' in Chandigarh.

He said the danger point is that the proportion of direct taxes to GDP has gone up by 1.2 per cent and reforms of indirect taxes have failed to yield results.

Singh, who is the leader of the Opposition in Rajya Sabha, said political will is lacking in making progress towards establishing a value-added tax (VAT) system.

"Every year the introduction of VAT is postponed."

He expressed concern over lower tax GDP ratio than that prevailing in the 1980's.

He noted that the public sector banks' non-performing assets (NPA) are touching a high of about 12.5 per cent.

Singh said the fiscal correction is linked with reforms in the process of governance.

"Any country progressing financially depends upon the character and involvement of people who make critical decisions in the government," he added.

PTI