top of page
  • Max

Finance Minister announces measures of Rs 73,000 crore to stimulate consumer spending

Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman announced measures of Rs 73,000 crore to stimulate consumer spending in the economy in an effort to fight the slowdown due to COVID-19 pandemic following lockdown.


Finance Minister announces measures of Rs 73,000 crore to stimulate consumer spending before end of this Financial Year in fight against COVID-19 Cash payment and leave encashment in lieu of one LTC during 2018-21 according to entitlement
Finance Minister Nirmala Sitharaman, Image Source: PIB Mumbai Twitter

Oct 12, Delhi: Union Minister of State for Finance & Corporate Affairs Shri Anurag Singh Thakur, Finance Secretary Dr Ajay Bhushan Pandey, Department of Financial Services Secretary Shri Debashish Panda and Department of Economic Affairs Secretary Shri Tarun Bajaj were also present during the announcement of the stimulus package.


While announcing the demand stimulus package, Smt. Sitharaman said, “Indications are that savings of government and organised sector employees have increased and we want to incentivise such people to boost demand for the benefit of the less fortunate.” The Finance Minister further said that if demand goes up based on the stimulus measures announced today, it will have an impact on those people who have been affected by COVID-19 and are desperately looking for demand to keep their business going.


The Finance Minister stressed on the idea that today’s solution should not cause tomorrow’s problem. Smt. Sitharaman said that the Government does not want to burden the common citizen with future inflation and also not put the Government debt on an unsustainable path.


The proposals presented today by the Finance Minister are designed to stimulate spending in a fiscally prudent manner as some of the proposals are for advancing or front-loading of expenditure with offsetting changes later while others are directly linked to increases in GDP. The present announcement by Smt. Sitharaman highlights the active intervention by the Government of India to combat economic slowdown created by COVID-19. The details are as follows: -


A. CONSUMER SPENDING


i) Leave Travel Concession (LTC) Cash Voucher Scheme

While announcing the scheme, the Finance Minister said, “The biggest incentive for employees to avail the LTC Cash Voucher Scheme is that in a four-year block ending in 2021, the LTC not availed will lapse, instead, this will encourage employees to avail of this facility to buy goods which can help their families.”


Central Government employees get LTC in a block of 4 years in which air or rail fare, as per pay scale/entitlement, is reimbursed and in addition, Leave encashment of 10 days (pay + DA) is paid. But due to COVID-19, employees are not in a position to avail of LTC in the current block of 2018-21.

Therefore, the Government has decided to give cash payment in lieu of one LTC during 2018-21, in which:

  • Full payment on Leave encashment and

  • Payment of fare in 3 flat-rate slabs depending on the class of entitlement

  • Fare payment will be tax-free

An employee, opting for this scheme, will be required to buy goods/services worth 3 times the fare and 1 time the leave encashment before 31st March 2021.


The scheme also requires that money must be spent on goods attracting GST of 12% or more from a GST registered vendor through digital mode. The employee is required to produce GST invoice to avail the benefit.


If Central Government employees opt for it, the cost will be around Rs. 5,675 crore. Employees of Public Sector Banks (PSBs) and Public Sector Undertakings (PSUs) will also be allowed this facility and the estimated cost for them will be Rs. 1,900 crore. The tax concession will be allowed for State Government/Private Sector too, for employees who currently are entitled to LTC, subject to following the guidelines of the Central Government scheme. The demand infusion in the economy by the Central Government and Central PSE/PSB employees is estimated to be Rs. 19,000 crore approx. The demand infusion by State Government employees will be Rs. 9,000 crore. It is expected that it will generate additional consumer demand of Rs. 28,000 crore.

ii) Special Festival Advance Scheme

A Special Festival Advance Scheme for non-gazetted employees, as well as for gazetted employees too, is being revived as a one-time measure to stimulate demand. All Central Government employees can now get an interest-free advance of Rs. 10,000, to be spent by 31st March 2021 on the choice of the festival of the employee. The interest-free advance is recoverable from the employee in a maximum of 10 instalments.

The employees will get pre-loaded RuPay Card of the advance value. The Government will bear Bank charges of the card. Disbursal of advance through RuPay card ensures digital mode of payment, resulting in tax revenue and encouraging honest businesses.


The one-time disbursement of Special Festival Advance Scheme (SFAS) is expected to amount to Rs. 4,000 crore; and if the SFAS is given by all State Governments, another tranche of Rs. 8,000 crore is expected to be disbursed.


B. CAPITAL EXPENDITURE


i) Special Assistance to the States:

While announcing measures related to Capital Expenditure, Smt. Sitharaman said that money spent on infrastructure and asset creation has a multiplier effect on the economy. It not only improves current GDP but also future GDP. The Government wants to give a new thrust to Capital Expenditure of both States and Centre.


Giving a new thrust on Capital Expenditure, Smt. Sitharaman said that money spent on infrastructure and asset creation has a multiplier effect on the economy. It not only improves current GDP but also future GDP. The Government wants to give a new thrust to Capital Expenditure of both States and Centre. Smt. Sitharaman said that the Central Government is issuing a special interest-free 50-year loan to the States of Rs. 12,000 crore Capital Expenditure. The Scheme consists of 3 Parts.


Part - 1 of the scheme provides for:

  • Rs. 200 crores each for 8 North East states (Rs. 1,600 crores)

  • Rs. 450 crores each Uttarakhand, Himachal Pradesh (Rs. 900 crores)

Part - 2 of the scheme provides for:

  • Rs. 7,500 crores for remaining states, as per 15th Finance Commission devolution.

The Finance Minister said that both Part 1 and Part 2 of interest-free loans given to States are to be spent by 31st March 2021 and 50% will be given initially, the remaining 50% will be given upon utilization of first 50%. Unutilised funds will be reallocated by the Central Government.


Under Part - 3 of Rs. 12,000 crore interest-free loans to states, Rs. 2,000 crore will be given to those states which fulfil at least 3 out of 4 reforms spelt out in Aatma Nirbhar Bharat Package (ANBP) vide Department of Expenditure’s Letter F.No. 40(06)/PF-S/17-18 Vol. V dated 17th May 2020. Rs 2,000 crore is over and above other borrowing ceilings.


Following are the features of this Scheme:

  • It can be used for new or ongoing capital projects needing funds and / or settling contractors’/ suppliers’ bills on such projects

  • CAPEX to be spent by 31st March 2021

  • This funding will be over and above all other additional borrowing ceilings given to states

  • Bullet repayment after 50 years, no servicing required for 50 years

ii) Enhanced Budget Provisions:

The Finance Minister said that an additional budget of Rs. 25,000 crore, in addition to Rs. 4.13 lakh crore given in Union Budget 2020, is being provided for Capital Expenditure on roads, defence, water supply, urban development and domestically produced capital equipment.


To allow smooth conducting of Government business, allocations will be made in forthcoming Revised Estimate discussions of the Ministry of Finance with concerned ministries.


It may be recalled that a package of Rs 1.70 lakh crore under Pradhan Mantri Garib Kalyan Package (PMGKP) was announced on 26th March 2020 and the Aatma Nirbhar Bharat Package (ANBP), a Special economic and comprehensive package of Rs 20 lakh crore - equivalent to 10% of India’s GDP – was announced on 12th May 2020 by Hon’ble Prime Minister Shri Narendra Modi. He gave a clarion call for आत्मनिर्भर भारत अभियान or Self-Reliant India Movement and also outlined five pillars of Aatmanirbhar Bharat – Economy, Infrastructure, System, Vibrant Demography and Demand.

0 views0 comments
Planner 5D- Interior design app

Planner 5D- Interior design app

Flipkart Online Shopping App

Flipkart Online Shopping App

World population to reach 8 billion this year, as the growth rate slows

July 12, 2022 at 6:57:56 AM

15 November 2022 is predicted to be the day that the global population reaches eight billion. The projection is revealed in the UN’s World Population Prospects 2022 report, which also shows that India is on course to surpass China as the world’s most populous country in 2023.

World population to reach 8 billion this year, as the growth rate slows

WHO: Nearly one billion people have a mental disorder

June 22, 2022 at 7:20:50 AM

Nearly one billion people worldwide suffer from some form of mental disorder, according to the latest UN data – a staggering figure that is even more worrying if you consider that it includes around one in seven teenagers.

WHO: Nearly one billion people have a mental disorder

What can the UN do? Check the top 5 questions answered

April 6, 2022 at 10:51:48 AM

The current war in Ukraine, following the Russian invasion, has sparked all sorts of questions about the United Nations, particularly the role of the Security Council, the General Assembly and the Secretary-General.

What can the UN do? Check the top 5 questions answered

Ukraine: UN’s Guterres joins call for Bucha war crimes probe

April 6, 2022 at 8:22:29 AM

UN chief António Guterres on Tuesday added his voice to the growing international calls for a war crimes investigation into the killing of civilians in the Ukrainian town of Bucha.

Ukraine: UN’s Guterres joins call for Bucha war crimes probe

Recent terrorist attacks in Israel undermine ‘prospects for peace’: Guterres

March 31, 2022 at 8:29:57 AM

Secretary-General António Guterres on Tuesday night condemned recent terrorist attacks in Israel that have claimed the lives of at least 11 Israeli citizens.

Recent terrorist attacks in Israel undermine ‘prospects for peace’: Guterres

China's BYD ceases to produce gasoline-powered vehicles

4/4/22, 7:00 AM

Chinese auto manufacturer BYD announced Sunday that it has already ceased the production of traditional gasoline-powered vehicles starting from March.

China's BYD ceases to produce gasoline-powered vehicles

Performance-oriented all-new ŠKODA SLAVIA 1.5 TSI Launched creates a segment of its own

3/27/22, 10:42 AM

All new ŠKODA SLAVIA 1.5 TSI starts at ₹ 16.19 lacs

Performance-oriented all-new ŠKODA SLAVIA 1.5 TSI Launched creates a segment of its own

CARS24 Raises $450 Million, Nearly Doubles Its Valuation To $1.84 Billion

9/25/21, 6:16 AM

CARS24, India’s leading e-commerce platform for pre-owned vehicles, announced today the closing of a $450M round of funding including a $340M Series F equity round alongside $110M debt from diversified financial institutions.

CARS24 Raises $450 Million, Nearly Doubles Its Valuation To $1.84 Billion

Tata Motors launches the ‘XPRES’ brand for fleet customers

7/18/21, 6:13 PM

Tata Motors, one of India’s leading automobile manufacturers, today announced the launch of a new brand ‘XPRES,’ exclusively for fleet customers.

Tata Motors launches the ‘XPRES’ brand for fleet customers

Audi India announces curated ownership plans for Audi e-tron and Audi e-tron Sportback customers

7/18/21, 5:56 PM

Special Service Plans, Extended Warranty and Buyback for a hassle-free ownership experience

Audi India announces curated ownership plans for Audi e-tron and Audi e-tron Sportback customers

TikTok hits 1 billion global active users

9/28/21, 8:56 AM

TikTok mission is to inspire creativity and bring joy.

TikTok hits 1 billion global active users

FACT CHECK: Crypto is increasingly being used for criminal activity and is a haven for illicit finance

6/23/21, 6:11 AM

Because cryptocurrency is still new, we are often asked about the biggest myths surrounding it. It’s common for a new market or product to confuse people until they get familiar with it. Think about Airbnb: the idea of staying in a stranger’s home seemed crazy until it didn’t.

FACT CHECK: Crypto is increasingly being used for criminal activity and is a haven for illicit finance

PUBG: NEW STATE surpasses 17 Million Google play store PRE-REGISTRATIONS following its recent ALPHA TEST

6/19/21, 4:40 AM

KRAFTON, Inc. to open pre-registration for the game on Apple’s App Store in Q3 2021

PUBG: NEW STATE surpasses 17 Million Google play store PRE-REGISTRATIONS following its recent ALPHA TEST
bottom of page