In an effort to stimulate the consumer demands, Union Finance Minister Nirmala Sitharaman, today, announced an LTC cash voucher scheme and an advance of Rs 10,000 as a special festival advance to all government employees citing that the COVID-19 pandemic had adversely affected the economy.
The minister, while addressing a press conference, said that the new proposals have been designed to stimulate demand in a financially prudent manner by front-loading some expenditure.
The Finance minister added, “Indications are that the savings of government and organised sector employees have increased, we want to incentivise such people to boost demand for the benefit of the less fortunate.”
The government employees are paid LTC in every four years to any destination of their choice one additional to their hometown. Under the LTC Cash Voucher scheme, the employees can choose for receiving cash amounting to leave encashment. Also, they get three times ticket fare to buy items that attract GST of 12 per cent or more. However, according to the minister, digital transactions are only allowed and GST invoice will be produced.
The minister added that the LTC Cash Voucher Scheme is expected to generate additional consumer demand in the range of Rs 28,000 crore. “Central government payout on cash-in-lieu-for-LTC will be Rs 5,675 crore, and another Rs 1,900 crore will be payout by central PSUs and public sector banks,” Sitharaman said.
Furthermore, the central government employees have the option to avail an interest-free advance of Rs 10,000 in the form of a prepaid RuPay Card. The one-time disbursement is expected to amount to Rs 4,000 crore. If given by all state governments, another Rs 8,000 crore is expected to be disbursed.
Moreover, to get the economic activities back on track, the Finance minister also announced an interest-free 50-year loan of Rs 12,000 crore to states for spending on capital projects. Of the total Rs 12,000 crore, Rs 1600 crore will be allotted to north-eastern states and Rs 900 crore will be kept for Uttrakhand and Himachal Pradesh while Rs 7,500 crore will be earmarked for the remaining states. The rest amounting to Rs 2,000 crore will be given to states that fulfill pre-stated reforms, said the minister.