The Finance Minister of India, Nirmala Sitharaman, announcedmeasures to inject liquidity in the hands of masses with the plan to have theeconomy jumpstarted after the lull induced by COVID-19 lockdown measures. Thesame is intended to be achieved by enabling and encouraging spending and demandduring and after the festive season.
Speaking at a press conference, the minister said that theCentre will launch ‘LTC (Leave Travel Concession) Cash Voucher Scheme' and‘Special Festival Advance Scheme'.
The key points from the decisions are:
Government employees can opt to receive cash amounting toleave encashment plus 3 times ticket fare, to buy items which attract GST of12% or more. Only digital transactions allowed, GST invoice to be produced
The LTC cash voucher scheme to generate additional consumerdemand in the range of Rs 28,000 crore
A special interest-free 50-year loan to states for Rs 12,000crore capital expenditure
Additional budget of Rs 25,000 crore (in addition to Rs 4.13lakh crore given in Budget 2020) is being provided for capital expenditure onroads, defence, water supply, urban development and domestically producedcapital equipment
All central govt. employees can now get an interest-freeadvance of Rs 10,000, in the form of a prepaid RuPay Card, to be spent by March31, 2021
Rs 10,000 special festival advance to all its employees
The government has made full cash payment on leaveencashment and payment of fare in three flat-rate slabs depending on class ofentitlement, including making the fare payment tax free.
An employee opting for this scheme, would be required to buygoods or services worth 3X the fare and one time the leave encashment beforeMarch 31, 2021.
To ensure government’s share in the spending, the moneyavailed must be spent on goods attracting GST on 12 per cent or more from a GSTregistered vendor through digital mode and GST invoice will be required to beproduced.
Sitharaman said that if central government employees opt forits, cost will be around Rs 5,675 crore. Employees of PSBs and PSUs will alsobe allowed this facility and the estimated cost for them will be Rs 1,900crore.
The tax concession will be allowed for state governments andprivate sector too, for employees who currently are entitled to LTC, subject toguidelines in the Central Government scheme.
The government has timed the revival attempt of the economywith the festive season.