The pandemic has adversely affected the economy, said Union Finance Minister Nirmala Sitharaman while addressing a press conference on economic issues on October 12, 2020. The Finance Minister's address was held ahead of the GST Council meeting, which is scheduled later today from 4-6 pm.
The Finance Minister reiterated that the needs of the poor and weaker sections were addressed by the centre through various announcements. She shared that the supply constraints have somewhat eased but consumer demand still needs to be given a boost.
The Finance Minister further stated that the proposals being presented are designed in a way that they can stimulate demand by front-loading or advancing some of the expenditure with some offsetting changes and the others are directly linked to an increase in the GDP.
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: FM Sitharaman https://t.co/2Me7IB3pTk
— ANI (@ANI) October 12, 2020
LTC Cash Voucher scheme, Special Festival Advance Scheme announced
The Finance Minister announced a consumer spending related proposal, which comprises two components-
1. Leave Travel Concession (LTC) Cash Voucher scheme
Under LTC Cash Voucher Scheme, the government employees can opt to receive cash amounting to leave encashment plus 3 times ticket fare, to buy items that attract GST of 12% or more. However, only digital transactions will be allowed and GST invoice will need to be produced.
Under LTC Cash Voucher Scheme, government employees can opt to receive cash amounting to leave encashment plus 3 times ticket fare, to buy items which attract GST of 12% or more. Only digital transactions allowed, GST invoice to be produced: FM Nirmala Sitharaman https://t.co/Fn24PBb8KQ pic.twitter.com/8G33LwVzGU
— ANI (@ANI) October 12, 2020
Benefit
The Finance Minister stated that if the Central govt employees opt for the scheme then this will cost around Rs 5,675cr. All PSB & PSU will also be allowed to avail this facility and for PSBs & PSUs the cost will be Rs 1,900 crores. The demand infusion in the economy by central govt and PSUs will be approximately Rs 19,000 cr.
The FM noted that even if 50 percent of the States opt to give this facility, it will bring in Rs 9000 crores.
Even if 50% of the States opt to give this facility, we think that this will bring in Rs 9000 crores: Finance Minister Nirmala Sitharaman https://t.co/u0yO7NjLgw
— ANI (@ANI) October 12, 2020
2. Special Festival Advance Scheme
• The Special Festival Advance Scheme for non-gazetted employees is being revived as a one-time measure for gazetted employees too.
• Under this scheme, all central government employees will get an interest-free advance of Rs 10,000, in the form of a prepaid RuPay Card, to be spent by March 31, 2021.
• The one-time disbursement of the special advance scheme is expected to amount to Rs 4,000 crores. If the amount is given by all state governments, another Rs. 8,000 crores is expected to be disbursed. The employees will be able to utilize the advance on any festival.
• The interest-free advance will have to paid back in 10 instalments.
The one-time disbursement of Special Festival Advance Scheme is expected to amount to Rs. 4,000 crores; if given by all state governments, another Rs. 8,000 crores is expected to be disbursed. Employees can spend this on any festival: Finance Minister Nirmala Sitharaman https://t.co/MnOhKUHrYT
— ANI (@ANI) October 12, 2020
Centres offers interest-free 50-year loans to States
The centre has also announced interest-free 50-year loans to States for capital expenditure for Rs 12,000 crores. The loans will comprise three components:
Part 1: Rs 2500 crore to North East (Rs 1600 crore), Uttarakhand and Himachal Pradesh (Rs 900 crore).
Part 2: Rs 7500 crore for other states in proportion to share in Finance Commission devolution
• 50 percent initially
• Balance after use of first instalment
• Unutilised funds to be realocated
Part 3: Rs 2000 crore for states that meet at least 3 out of 4 reforms given under AatmaNirbhar fiscal deficit package.
Centre offers interest-free 50-year loans to States for capital expenditure for Rs 12,000 crores, consisting of three components: Finance Minister Nirmala Sitharaman pic.twitter.com/5kd5ltfBaU
— ANI (@ANI) October 12, 2020
Additional budget for roads, defence, infrastructure
FM Nirmala Sitharaman further announced that an additional budget of Rs 25,000 cr will be provided for capital expenditure of Centre on roads, defence, infrastructure, water supply, urban development and domestically produced capital equipment.
The allocations will be made in forthcoming revised estimate discussions of Ministry of Finance with concerned ministries.
An additional budget of Rs 25,000 cr will be provided for capital expenditure of Centre on roads, defence, infrastructure, water supply, urban development and domestically produced capital equipment: FM Nirmala Sitharaman pic.twitter.com/fHPzGPyWks
— ANI (@ANI) October 12, 2020
Objective
The FM further stated that as per centre's estimates. the measures announced today for boosting consumer spending and capital expenditure, will boost demand by Rs 73,000 crores, which will be spent by March 31, 2021.
We estimate that the measures announced today, for boosting consumer spending and capital expenditure, will boost demand by Rs 73,000 crores, to be spent by March 31, 2021: Finance Minister Nirmala Sitharaman pic.twitter.com/sZX6PbBC3o
— ANI (@ANI) October 12, 2020
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