Today Finance Minister Nirmala Sitharaman announced a relief package of Rs 73000 crore. Under this, he made several important announcements including giving cash vouchers in lieu of leave travel concession and the announcement of 10 thousand rupees to 10 employees as festival advance. In a tweet on these announcements, PM Modi has said that these announcements have been made at the right time to boost the spending of people. He said that these steps will also boost the economy.
What announcements have the Finance Minister made?
Finance Minister Nirmala Sitharaman has announced a cash voucher in lieu of Holiday Travel Concession (LTC) to government employees to improve consumer demand and stimulate the economy during the festive season. Apart from this, a special festival advance of Rs 10,000 has also been announced to the officers and employees of the Central Government. This advance will be interest-free and will have to be refunded in 10 installments. At the same time, employees can use cash vouchers in lieu of LTC to buy non-food items, which attract a Goods and Services Tax (GST) of 12 percent or more.
12000 crore interest free loan
At the press conference on Monday, Sitharaman also announced additional capital expenditure and interest-free loan of Rs 12,000 crore to the states. The states will be given this loan for 50 years. The finance minister said in a press conference that the government will give income tax-free cash vouchers to its employees in lieu of LTC. Employees can use these vouchers to buy products that have a GST rate of 12 percent or more. This condition means that employees cannot use this voucher to purchase food products. Every four years, the government gives LTC to its employees to travel to a destination of their choice. In addition, an LTC is given to them to visit their home state.
Sitharaman said it is difficult for employees to travel this year because of the Kovid-19 epidemic. In such a situation, the government has decided to give them cash vouchers. It will have to be spent by March 31, 2021. Central public sector undertakings and banks will also give cash to their employees in place of LTC. In addition, the government has announced a grant of 10,000 rupees as festival advance to all its officers and employees. Sitharaman said that these two measures are likely to generate consumer demand of Rs 28,000 crore.
LTC: Employees happy with government announcement, but travel-tourism industry may come
Trying to boost demand in the festive season
The government had announced a Rs 20 lakh crore self-sufficient India package in May this year. Now the government is taking steps to encourage demand during the festive season. People usually spend more in the festive season. The government imposed a strict lockdown to prevent the spread of the corona virus epidemic. This led to a steep 23.9 percent drop in the economy in the April-June quarter.
Sitharaman said that by combining debt and additional capital expenditure to the states, “there is a rough estimate that the LTC tax benefit would be a potential expenditure of the private sector to the government-led government demand of Rs 28,000 crore.” The total additional demand will be more than Rs 1 lakh crore. ”The Finance Minister said that the measures taken by the government should not burden the common citizen. Nor should it affect future inflation. Apart from this, the debt of the government should also not be headed in a direction which cannot be sustained.
Sitharaman said, “Today’s solution should not become tomorrow’s problem.” Sitharaman said that every four years the government gives LTC to its employees to travel to a destination of their choice. In addition, an LTC is given to them to visit their home state. Employees can also take LTC to visit their homeland twice. Employees are paid airfare or train fare according to their rank or eligibility. On an LTC, the government will pay the employees’ leave encashment in full. And will also pay rent on the basis of three slabs.
Central employees will get government gift, cash in lieu of holidays
5,675 crore spent for LTC
He said that the employees opting for this scheme would have to purchase goods or services equal to three times the rent and one fold of leave encashment by March 31, 2021. This amount will have to be spent on products on which GST is 12 percent or more. He said that the government will spend Rs 5,675 crore for LTC. At the same time, central public sector undertakings and banks will have to spend an estimated Rs 1,900 crore on this facility. The Finance Minister said that the move would generate a demand of Rs 19,000 crore. On the other hand, the state government employees opting for this scheme will create a demand of Rs 9,000 crore. Apart from this, the government has decided to give interest free advance of Rs 10,000 to all its officers and employees on the occasion of festivals.
Sitharaman said that the system of giving advance for the festival to the Central Government employees was abolished following the recommendations of the Seventh Pay Commission. He said that as a one-time measure, the government has decided to give an interest-free advance of Rs 10,000 to all officers and employees. He said that this advance of Rs 10,000 will be in the form of a pre-paid RuPay card. It will have to be spent by March 31, 2021. He said that employees will have to pay this advance in 10 installments. The government will spend Rs 4,000 crore on this. He said that if the scheme is adopted by the states even 50 percent, then another Rs 4,000 crore will be spent. The finance minister also announced an additional capital expenditure of Rs 25,000 crore by the central government. He said that this additional amount would be spent on roads, defense infrastructure, water supply and urban development.
This will be in addition to the fixed budget of Rs 4.13 lakh crore. To promote economic activities, the central government will provide interest-free loan of Rs 12,000 crore to the states. The loan will be of 50 years duration and will be given to spend on capital projects. Out of this Rs 12,000 crore, Sitharaman will give Rs 1,600 crore to the northeastern states and Rs 900 crore to Uttarakhand and Himachal Pradesh. He informed that an amount of Rs 7,500 crore will be given to the remaining states. At the same time, Rs 2,000 crore will be given to those states who have completed the reforms mentioned earlier. Sitharaman said that LTC voucher scheme will generate Rs 28,000 crore and advance for festivals will create additional consumer demand of Rs 8,000 crore, ie a total of Rs 36,000 crore. Apart from this, additional capital expenditure of Rs 37,000 crore will be incurred by the Center and the states. This will give a boost of Rs 73,000 crore to demand by 31 March 2021.