N. Sitharaman unveils stimulus plan to boost economy
On Monday, Finance Minister, Nirmala Sitharaman, held a press conference to address the economic issues related to dwindling demand and disclosed government’s plans to boost Indian consumption. At the conference, held at National Media Centre, New Delhi, the FM unveiled that centre would be granting a Rs 12,000 crore interest-free 50-year loan to states for spending on capital projects in order to give a push to the state economies. She added that the states could also use the money for completion of existing projects or to settle pending bills.
Besides, Sitharaman announced a special festival advance scheme which included a one-time Rs 10,000 interest-free advance. It could be availed by all government officers and employees as part of plans to increase consumer spending and stir demand in the economy.
The government also introduced Leave Travel Concession (LTC) cash voucher scheme for the government employees, under which they could opt to receive cash amounting to leave encashment, plus three times ticket fare, to buy items which included a GST of 12 percent or more. She added that the offer would be applicable only for digital transactions, which included GST in invoice.
“Every four years, central government employees get LTC to any destination to their choice plus one to their hometown. Since travel is difficult to undertake during the pandemic, the government will pay the entitled fare as cash vouchers which have to be spent by March 31, 2021,” she said.
The union minister, who held the conference ahead of the GST Council meet, said that these measures were introduced to infuse demand in the economy, targeting about Rs. 19,000 crore by central government and central PSE/PSB employees and about Rs. 9,000 crore by State Government employees. She added that an additional consumer demand of Rs. 28,000 crore could be generated by the stimulus.
Union minister Prakash Javadekar applauded the central government’s LTC Scheme and Special Festival Advance Scheme. He tweeted, “Cash in lieu of LTC and Rs 10,000 special festival advance, a good and timely decision by @narendramodi government. This will provide a strong impetus to the consumer demand in the country and hence will go a long way to boost the economy.” Radhika Rao, the economist at DBS Bank told the Bloombergquint, that the economic stimulus provided by the centre to government employees would prove to be more effective in boosting the demand in economy if similar action was taken by the private sector. Many analyst believed that the stimulus was on the lower side but was definitely a step in the right direction as it would help state governments in pushing some projects stuck in the pipelines.