New Delhi (NVI): Finance Minister Nirmala Sitharaman today said that the Central government will give Rs 10,000 interest-free festival advance to all its employees as part of plans to increase consumer spending.
In order to stimulate demand in the economy, the Finance Minister has announced two schemes – Special Festival Advance Scheme and LTC Cash Voucher Scheme – to primarily benefit central government employees.
At a press conference, Sitharaman said that festival advance was discontinued from 6th Pay Commission for central government employees.
“The proposals being presented are designed in a way that they can stimulate demand by front-loading/advancing some of the expenditure with some offsetting changes. Others are directly linked to an increase in the GDP,” 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.
Under the LTC Cash Voucher scheme, government employees can opt to receive cash amount to leave encashment plus three times the ticket fare, to buy items which attract a GST of 12 per cent or more.
The Finance Minister further said that only digital transactions will be allowed and a GST invoice will have to be produced.
This means central government employees who are eligible to claim LTC will be able to avail leave encashment benefit in lieu of travel expenses. The money can thereafter be used by them towards discretionary spending.
“If Central government employees opt for it, this will cost around Rs 5,675 crore. The employees of PSBs and PSUs allowed to avail this facility, and for PSBs and PSUs the cost will be Rs 1,900 crores. The demand infusion in the economy by central govt and PSUs will be approx Rs 19,000 crore,” said Nirmala Sitharaman.
“Even if 50 per cent of the States opt to give this facility, we think that this will bring in Rs 9,000 crores,” she added. So the total benefit under the LTC Voucher scheme can be roughly Rs 28,000 crore. Another boost worth Rs 28,000 crore can be gained if the private sector chips in.