The government decides to give budgetary incentives to investors to build infrastructure in the backward regions. Explain the possible incentives and the reasons for the same.
The government decides to give budgetary incentives to investors to build infrastructure in the backward regions. Explain the possible incentives and the reasons for the same.
The possible incentives can be:
(a) Tax concessions
(b) Subsidies in electricity and raw material
(c) Property at low prices
The possible reason is to develop the area by reallocating the resources. There are many activities which are not undertaken by the private sector due to the lack of profits or huge investments involved. Provisions like water supply, sanitation etc., have to be taken charge of by the Government itself. The Government can encourage the private sector to take interest in the production of public goods by providing tax concessions and subsidies and this is how it helps in reallocating the resources.
The possible incentives can be:
(a) Tax concessions
(b) Subsidies in electricity and raw material
(c) Property at low prices
The possible reason is to develop the area by reallocating the resources. There are many activities which are not undertaken by the private sector due to the lack of profits or huge investments involved. Provisions like water supply, sanitation etc., have to be taken charge of by the Government itself. The Government can encourage the private sector to take interest in the production of public goods by providing tax concessions and subsidies and this is how it helps in reallocating the resources.
