Business Standard

Budget 2021: Go for bond, not cess to fund Covid expenditure, say experts

The amount raised through these bonds would not be high since domestic borrowing will exert pressure on yields.

D Subbarao, Pronab Sen
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D Subbarao, Ex-RBI guv (left) and Pronab Sen, Ex-chief statistician

Indivjal Dhasmana New Delhi
As the Budget may try new options to finance the Centre’s Covid expenses and additional spend on reviving the economy, most experts favour bonds to fund extra outlays (compared to cess).

“In a situation where the demand-side continues to be weak, any additional form of taxation is a bad idea,” said former chief statistician Pronab Sen.

He said raising it through bonds which have attractive conditions is a better idea because that would be a voluntary shift by the people.

He also reminded policymakers that the primary cost of immunisation is going to be borne by state governments.

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