PHD Chamber of Commerce and Industry (PHDCCI) on Friday suggested the government should issue special Covid bonds to raise funds for providing stimulus, thereby pushing economic growth.

The industry body said coronavirus-induced restrictions in the country have created a difficult time for trade and industry, and the government has to step up with proactive, calibrated measures to help them.

“To mobilise fiscal resources of such stimulus support to the economy, the issuance of special Covid bonds could be an appropriate substitute to market borrowings by the government,” it said.

There is a need for effective fiscal measures such as reduction in GST rates, along with Direct Benefit Transfers for urban and rural poor, in-kind transfers, front-loading of infrastructure investments, among others, to create demand in the economy, the chamber added.

“Various governments, banks and financial institutions around the world have often adopted 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, it added.

In a separate statement, PHDCCI president Sanjay Aggarwal said World Trade Organisation’s (WTO) temporary patent waiver for Covid-19 vaccines and other related products will enhance transfer of knowledge and knowhow for scaling up vaccine production worldwide.

The supply of raw materials for vaccines will ramp up production and resolve the current vaccine shortage, he added.