The proposals presented today by the Finance Minister are designed to stimulate spending in a fiscally prudent manner as some of the proposals are for advancing or front-loading of expenditure with offsetting changes later while others are directly linked to increase in GDP. The present announcement by Sitharaman highlights the active intervention by the Government of India to combat the economic slowdown created by COVID-19.<\/p>\n
The details are as follows: –<\/strong><\/p>\n While announcing the scheme, the Finance Minister said, \u201cThe biggest incentive for employees to avail the LTC Cash Voucher Scheme is that in a four-year block ending in 2021, the LTC not availed will lapse, instead, this will encourage employees to avail of this facility to buy goods which can help their families.\u201d<\/p>\n Central Government employees get LTC in a block of 4 years in which air or rail fare, as per pay scale\/entitlement, is reimbursed and in addition, Leave encashment of 10 days (pay + DA) is paid. But due to COVID-19, employees are not in a position to avail of LTC in the current block of 2018-21.<\/p>\n Therefore, the Government has decided to give cash payment in lieu of one LTC during 2018-21, in which:<\/strong><\/p>\n An employee, opting for this scheme, will be required to buy goods\/services worth 3 times the fare and 1 time the leave encashment before 31st<\/sup>\u00a0March 2021.<\/strong><\/p>\n The scheme also requires that\u00a0money must be spent on goods attracting GST of 12% or more from a GST registered vendor through digital mode<\/strong>. The employee is required to produce GST invoice to avail the benefit.<\/p>\n If Central Government employees opt for it, cost will be around Rs. 5,675 crore. Employees of Public Sector Banks (PSBs) and Public Sector Undertakings (PSUs) will also be allowed this facility and the estimated cost for them will be Rs. 1,900 crore.\u00a0The tax concession will be allowed for State Government\/Private<\/strong>\u00a0Sector<\/strong>\u00a0too, for employees who currently are entitled to LTC, subject to following the guidelines of the Central Government scheme.\u00a0The demand infusion in the economy by Central Government and Central PSE\/PSB employees is estimated to be Rs. 19,000 crore approx. The demand infusion by State Government employees will be Rs. 9,000 crore. It is expected that it will generate additional consumer demand of Rs. 28,000 crore.<\/strong><\/p>\n 2. Special Festival Advance Scheme<\/u><\/strong><\/p>\n A Special Festival Advance Scheme\u00a0for non-gazetted employees, as well as for gazetted employees<\/strong>\u00a0too, is being revived as a\u00a0one-time measure to stimulate demand<\/u><\/strong>. All Central Government employees can now get an\u00a0interest-free advance of Rs. 10,000, to be spent by 31st<\/sup>\u00a0March, 2021<\/strong> on the choice of festival of the employee. The interest-free advance is recoverable from the employee in maximum 10 installments.<\/p>\n The\u00a0employees will get a pre-loaded RuPay Card of the advance value<\/strong>. The Government will bear Bank charges of the card. Disbursal of advance through RuPay card ensures a digital mode of payment, resulting in tax revenue and encouraging honest businesses.<\/p>\n The one-time disbursement of Special Festival Advance Scheme (SFAS) is expected to amount to Rs. 4,000 crore; and if the SFAS given by all State Governments, another tranche of Rs. 8,000 crore is expected to be disbursed.<\/strong><\/p>\n While announcing measures related to Capital Expenditure, Smt. Sitharaman said that money spent on infrastructure and asset creation has a multiplier effect on the economy. It not only improves current GDP but also future GDP. The Government wants to give a new thrust to Capital Expenditure of both States and Centre.<\/p>\n Giving a new thrust on Capital Expenditure, Smt. Sitharaman said that money spent on infrastructure and asset creation has a multiplier effect on the economy. It not only improves current GDP but also future GDP. The Government wants to give a new thrust to Capital Expenditure of both States and Centre. Smt. Sitharaman said that\u00a0the Central Government is issuing a special interest-free 50-year loan to States of Rs. 12,000 crore Capital Expenditure<\/strong>. The Scheme consists of\u00a03 Parts<\/strong>.<\/p>\n Part – 1<\/u><\/strong>\u00a0of the scheme provides for:<\/p>\n Part – 2<\/u><\/strong>\u00a0of the scheme provides for:<\/p>\n The Finance Minister said that both Part 1 and Part 2 of interest-free loans given to States are to be spent by 31st<\/sup>\u00a0March, 2021 and 50% will be given initially, the remaining 50% will be given upon utilization of first 50%. Unutilised funds will be reallocated by the Central Government.<\/p>\n Under\u00a0Part – 3<\/u><\/strong>\u00a0of Rs. 12,000 crore interest-free loans to states,\u00a0Rs. 2,000 crore will be given to those states which fulfill at least 3 out of 4 reforms spelled out in Aatma Nirbhar Bharat Package (ANBP) vide Department of Expenditure\u2019s Letter F.No. 40(06)\/PF-S\/17-18 Vol. V dated 17th<\/sup>\u00a0May 2020<\/strong>. Rs 2,000 crore is over and above other borrowing ceilings.<\/p>\n Following are the features of this Scheme:<\/p>\n The Finance Minister said that additional budget of Rs. 25,000 crore, in addition to Rs. 4.13 lakh crore given in Union Budget 2020, is being provided for Capital Expenditure on roads, defence, water supply, urban development and domestically produced capital equipment.<\/p>\n To allow smooth conducting of Government business, allocations will be made in forthcoming Revised Estimate discussions of Ministry of Finance with concerned ministries.<\/p>\n It may be recalled that a package of Rs 1.70 lakh crore under Pradhan Mantri Garib Kalyan Package (PMGKP) was announced on 26th<\/sup>\u00a0March, 2020 and the Aatma Nirbhar Bharat Package (ANBP), a Special economic and comprehensive package of Rs 20 lakh crore – equivalent to 10% of India\u2019s GDP \u2013 was announced on 12th<\/sup>\u00a0May, 2020 by Hon\u2019ble Prime Minister Shri Narendra Modi. He gave a clarion call for \u0906\u0924\u094d\u092e\u0928\u093f\u0930\u094d\u092d\u0930 \u092d\u093e\u0930\u0924 \u0905\u092d\u093f\u092f\u093e\u0928 or Self-Reliant India Movement and also outlined five pillars of Aatmanirbhar Bharat \u2013 Economy, Infrastructure, System, Vibrant Demography and Demand.<\/p>\n Ministry of Finance<\/strong><\/p>\n [Press Release dt. 12-10-2020]<\/strong><\/p>\n [Source: PIB]<\/p>\n","protected":false},"excerpt":{"rendered":" The proposals presented today by the Finance Minister are designed to stimulate spending in a fiscally prudent manner as some of the <\/p>\n","protected":false},"author":8808,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1188,2],"tags":[43774,43772,39924,41322,36234,39426,4621,43773,2824],"class_list":["post-237356","post","type-post","status-publish","format-standard","hentry","category-hot_off_the_press","category-news","tag-capital-expenditure","tag-consumer-spending","tag-covid-19","tag-economy","tag-finance-minister","tag-gdp","tag-government","tag-ltc","tag-Ministry_of_Finance"],"yoast_head":"\nCONSUMER SPENDING<\/strong><\/span><\/h3>\n
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CAPITAL EXPENDITURE<\/strong><\/span><\/h3>\n
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