Industry body PHDCCI on Friday suggested the government issue special Covid bonds to raise funds and provide economic stimulus.
PHD Chamber of Commerce and Industry said the coronavirus-induced restrictions in the country have created a difficult time for trade and industry, and the government has to step up with proactive as well as calibrated measures to help them.
“To mobilise the fiscal resources of such stimulus support to the economy, the issuance of special Covid bonds could become an appropriate substitute to the market borrowings by the government,” it said.
There is a need for effective fiscal measures such as a reduction in the GST rates to create demand in the economy along with Direct Benefit Transfers for the urban and rural poor, in-kind transfers, front-loading of infrastructure investments, among others, the chamber added.
“Various governments, banks and financial institutions around the world have often adopted the innovative mechanism of issuing special bonds to raise resources for a speedy recovery in difficult situations,” PHDCCI noted.
Such special bonds involve relatively less inflation risk, limit the crowding-out of private investments from other sectors of the economy and form a source of tax-free income for bondholders.
Finance minister Nirmala Sitharaman on Friday asked various ministries to try to spend more than their capital expenditure targets as well as explore public private partnerships for viable projects.
At the meeting with senior government officials, the finance minister discussed the road map for infrastructure development.