New Delhi: In a bid to stimulate demand in the economy, Finance Minister Nirmala Sitharaman on Monday announced a payment of cash in lieu of LTC and Rs 10,000 festival advance to government employees to stimulate consumer demand during the festival season and boost the economy.
She also announced additional capital spending and Rs 12,000 crore, 50-year interest-free loan to states to boost the economy that has been battered by the pandemic and the resulting lockdown.
Govt to give cash vouchers to staff in lieu of LTC this year: FM
The government announced giving out cash vouchers to central government employees this year in lieu of leave travel concession (LTC) fare which could be spent only on buying non-food GST-rated items.
FM said the employees could buy items that attract 12 per cent or more goods and services tax (GST). These purchases will have to be made in digital mode from GST-registered outlets.
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.
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.
The demand infusion because of this would be Rs 19,000 crore, and another Rs 9,000 crore if half of the states follow this guideline, she added.
Govt announces Rs 10,000 interest-free festival advance to employees
The government announced a one-time Rs 10,000 interest-free festival advance to all its officers and employees as part of plans to increase consumer spending to spur demand in the economy.
Nirmala Sitharaman said festival advance was discontinued from 6th Pay Commission for central government employees.
But as a one-time measure, an interest-free advance will be given to all officers and employees of the central government, she said.
This Rs 10,000 advance will come as a pre-paid rupay card, which can be availed and spent by March 31, 2021.
The repayment will be in 10 installments, she said adding that Rs 4,000 crore is likely to be spent on this.
Read more: Govt cuts late payment surcharge as interest rates drop
Govt to give Rs 12,000 cr interest-free 50-year loan to states for capital projects
Nirmala Sitharman announced a Rs 12,000 crore interest-free 50-year loan to states for spending on capital projects in a bid to boost economy.
She said, out of the Rs 12,000 crore, Rs 1,600 crore will be given to north-eastern states and Rs 900 crore will be for Uttrakhand and Himachal Pradesh.
She said Rs 7,500 crore will be for the remaining states. Rs 2,000 crore will be given to states that fulfill pre-stated reforms.
The loan will have to be spent entirely on new or ongoing capital projects, she said adding that states can settle bills of contractors and suppliers but all the amount has to be paid before March 31, 2021.
The loan is over and above borrowing ceilings of the states and the repayment will be one bullet payment after 50 years, she added.
The Finance Minister also announced additional capital expenditure of Rs 25,000 crore by the central government.
This will be in addition to Rs 4.13 lakh crore budgeted, she said, adding that the additional money will be for spending on roads, defence infrastructure, water supply and urban development.
(PTI Report)
