Launch ‘Corona’, 15-yr infra bonds: MCCI to FM
Provide Incentives to corporates to move their offices to non-urban regions to enable more widespread employment
Srivats Ram, President, MCCI
CHENNAI: The Government has faced a tumultuous year with COVID-19 adversely affecting the nation. With the start of vaccination, the country is starting to recover from the economic havoc wreaked by the pandemic.
Srivats Ram, President, The Madras Chamber of Commerce and Industry, said while the Finance Minister in her budget speech last year had detailed significant outlays for the next five years, it is important to look at considerable front ending of these in the coming year to give a much-needed fillip to the economy.
Float tradable 15-yr infra bonds
There is an issue of funding any significant spend on infra given the limited resources of the government, especially in the face of the pandemic induced slowdown. Srivats said “It might be worthwhile for the government to float tradable 15-year infra bonds that bear an interest rate 1% over the treasury rate which in redemption would be taxed at a concessional rate of 5%. While this on its own would not suffice to raise funds for infra projects, it could help plug gaps in funding. If there is a focus on the infra spend in the coming year, it would have an exponential growth effect in terms of employment and GDP.”
Corona Bond
As the country looks at the deployment of probably one of the largest vaccination drives and its associated costs, the Centre could look at a “Corona” Bond, that is interest bearing and interest from which is exempt up to a limit of Rs 2.5lakhs, per individual. This would be a fund mobilisation program that could involve and benefit investor citizens and the government.
Tax Exemption for MSMEs
The MSME firms that are the backbone of the economy have been adversely affected by the pandemic. Srivats said the government could look at a scheme wherein firms could be allowed 50% of their profits to be exempt from tax if that amount is deposited in scheduled banks to be used for investment in plant equipment over a three-year period.
Moving to non-urban centres
One of the technological adaptations that the industry experienced from the pandemic was related to work from home. Srivats said there should be an incentive for organisations to move their offices from urban centres to non-urban regions where possible. This will enable a more widespread employment across the country. But to achieve this there needs to be reliable and effective wi-fi connectivity. There are immense opportunities to transform geo-politics in trade and commerce. There should be a concessional 15% tax rate on global inhouse centres based on a commitment of substantial employment within a time period.
Finally, while the Centre has initiated ROTDEP (Remission of Duties and Taxes on Exported Products) and PLI (productivity-linked incentive) schemes for exporters and manufacturers, they should hasten the notification of rates on these schemes.