Five year Tax Holidays Scheme likely to spur up investment

New Delhi, Mar 4 (UNI) Five year tax holidays scheme extended in 2008-09 budget for putting up of hotels, health and education institutes, especially in Tire II and Tire III cities, is expected to spur up investment opportunities of about Rs 5 lakh crores.

Moreover it is likely to generate 50 million direct and indirect employment opportunities in nearly 750 cities by end of 11th Five Year Plan, according to industry body Assocham.

According to the findings of the survey, the lead sector for investment and employment generation as the scheme take off will be hotel followed by education and health institutions since demand will be more for hotels and that too in prime locations of various Tire II and Tire III cities.

The scheme which is bound to get popularised will increase Gross Domestic Produce (GDP) of various states and union territories by a minimum of four per cent.

It will also catapult the infrastructure and civic amenities of about 750 townships that fall under categories of Tire II Tire III cities, feels about 90 per cent of CEOs whose opinion were sought on impact of tax holidays schemes as announced by the Finance Minister P Chidambaram while presenting 2008-09 budget.

Releasing the findings of the survey, Venugopal N Dhoot said, ''over 80 per cent of CEOs polled in the survey estimated that each state and union territory is likely to garner investments volume of nearly 666 crore in its new hotels, health and educational institutes due to the five year tax holidays schemes as it would further push up decentralisation of economic activities, which has already commenced.'' Companies like TCS, Wipro, Genpact and the like have already started moving out of metros and large cities and opened up their outfits in prospective states capitals and some of their lead sites.

The tax holiday scheme is going to add on it at a much faster speed in next five years, he added.

Over 70 per cent of CEOs, however, felt that of the projected Rs five lakh crore investments about Rs 2.75 lakh crore will go to the hotel sector alone, because of demand factor for which states and UT governments will have to allocate lands and sites to their developers and prime locations and create nearly 20 million jobs opportunities.

However, the health sector will fall in the lowest categories for attracting investments as in the budget announcements, it has been amply made clear that those investors who wish to avail of five year's tax incentives would have to serve the rural folks.

This might discourage the prospective investors initially as the clause will not encourage investors to go in and serve rural populace and therefore it is suggested that the public investments must be increased to serve the rural masses by way of putting up chains of health institutions, it added.

Over 75 per cent of CEOs held that another prolific area for higher investments will also be education sector because of demand and opportunities factor as huge migration of students seeking to build professional career is noticed towards metros.

Therefore the investors will like to cash in on the holiday tax incentive scheme and put up chains of such institutions in Tire II and Tire III cities and generate over Rs 2.5 crores of investment opportunities and job opportunities for minimum 15 million workforce, said Mr Dhoot.

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