New Delhi, Oct 12 : Centre on Monday announced a slew of schemes to trigger economic revival via stimulus measures.
Most of these initiatives were targeted to restore spending and demand during and after the festive season.
Speaking at a press conference, Finance Minister Nirmala Sitharaman said that the Centre will launch ‘LTC Cash Voucher Scheme’ and ‘Special Festival Advance Scheme’.
Accordingly, the Centre expects Rs 28,000 crore worth of additional demand generation from LTC scheme.
Sitharaman said if private sector also comes forwards with similar offering, another Rs 28,000 crore of demand would be generated.
The Finance Minister also announced a special festival advance of Rs 10,000 for all gazetted and non gazetted officers. This scheme, she explained is being revived and will be one time only.
Besides, the Centre is ready to give a thrust to capital expenditure, she said.
As per the measure, a special 50-year interest free loan to state governments will be provided for capital expenditure for Rs 12,000 crore.
Out of the total amount, Rs 1,600 crore would be aimed towards the north-eastern states, and Rs 900 crore loan would be provided to Uttarakhand and Himachal.
Loans worth Rs. 7,500 crore for other states, in proportion to share in Finance Commission devolution, which would include 50 per cent initial disbursement and the balance would be disbursed the use of first instalment. The unutilised funds will be reallocated.
Further, Rs. 2,000 crore would be allocated to states which meet at least three out of four reforms announced earlier.
The loans provided would be used for new or ongoing capital projects needing funds and settling the bills of contractors and suppliers on such projects.
The borrowed amount would have to be spent by March 31, 2021.
The Finance Minister said that this funding will be over and above all other additional borrowing ceilings given to states.
In addition, the Centre’s Capital expenditures budget also increased by Rs 25,000 crore this year and go with Rs 4,13,000 crore already provided in the budget.
However, Centre’s stimulus announcement did not enthuse the key Indian equity indices which slipped during afternoon trade session on Monday.
Accordingly, the slight fall comes right after the Nifty50 on the National Stock Exchange (NSE) touched the 12,000 mark for the first time since February 2020, during the early morning trade session.
Similarly, the S&P BSE Sensex made healthy gains. It crossed the 40,900 points early in the trade.
At around 1.30 p.m., the S&P BSE Sensex traded at 40,433.14, lower by 76.35 points or 0.19 per cent from the previous close of 40,509.49.
The NSE Nifty50 traded at 11,879.70, lower by 34.50 points or 0.29 per cent from its previous close.
Analysts opined that expensive propositions along with profit booking also impacted the market sentiment.
Special interest-free festival advance of Rs 10K for govt employees
Coming festive season government employees will receive interest-free advance of Rs 10,000 each that will help generate demand worth Rs 8,000 in the Covid affected economy. Employees will get pre-loaded Rupay Card of the advance value, which they would have to spend by March 31, 2021.
The amount spent would be recoverable in 10 instalments. The bank charges for the issue of card will be borne by the government.
With a view to boost consumer demand and revive the economy which has been subdued amid the pandemic, Finance Minister Nirmala Sitharaman on Monday announced a slew of measures to stimulate expenditure by the public.
As per the minister, the scheme would ensure digital mode of payment, resulting in tax revenue and encouraging honest businesses. But unlike the LTC scheme, consumers would be free to spend the amount on items of their choice irrespective of GST applicability.
Festival advance along with other similar advances were abolished on the recommendations of 7th Pay Commission. Prior to this, non-gazetted central government employees used to get Rs 4,500 as festival advance.
With the latest proposal, the festival advance to government employees (both gazetted and non-gazetted) will be for festivals up to March 31, 2021.
The Centre, is likely to disburse Rs 4,000 crore towards the advances.
If implemented by all state governments too, another Rs 8,000 crore is likely to be disbursed, with the current assumption that 50 per cent states would adopt the scheme and the states’ expenditure estimate would be at Rs 4,000 crore.
This scheme would not result in any permanent increase in government expenditure and as it advances will be recovered.
The move is likely to generate additional consumer demand of Rs 8,000 crore.