New Delhi: Finance Minister Nirmala Sitharaman on Monday announced an LTC cash voucher scheme and a special festival advance of Rs 10,000 for all government employees.
With COVID-19 pandemic having severely affected the economy, the government hopes to stimulate demand with these moves.
“Indications are that the savings of government and organized sector employees have increased, we want to incentivize such people to boost demand for the benefit of the less fortunate,” Sitharaman said during a press conference.
Central government employees get LTC for travel to any destination of their choice plus one to their hometown every four years.
Under the LTC cash voucher scheme, government employees can opt for cash equivalent to leave encashment plus three times of ticket fare to buy items that attract GST of 12 per cent or more.
The LTC Cash Voucher Scheme has the potential to generate demand worth about Rs 28,000 crore. (2/2) pic.twitter.com/I7142bzjig
— NSitharamanOffice (@nsitharamanoffc) October 12, 2020
However, the minister informed that only digital transactions will be allowed and GST invoice need to be produced.
The government expects to generate additional consumer demand of around Rs 28,000 crore. “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.
In addition, Central government employees can avail of an interest-free advance of Rs 10,000 in the form of prepaid RuPay Card. It’ll be a one-time disbursement, expected to be to the tune of Rs 4,000 crore. If given by all state governments, another Rs 8,000 crore is expected to be disbursed.
“The interest-free advance of Rs 10,000 has to be spent by March 31, 2021, and is to be paid back in 10 instalments. The government will bear the bank charges,” Sitharaman said.
The Finance minister also announced Rs 12,000 crore worth of interest-free 50-year loan to states for spending on capital projects. Out of that, Rs 1,600 crore will be given to north-eastern states, Rs 900 crore to Uttarakhand and Himachal Pradesh, and Rs 7,500 crore for other states. The remaining Rs 2,000 crore will be given to states that fulfill pre-stated reforms, Sitharaman informed.
“The loan will have to be spent entirely on new or ongoing capital projects. States can settle bills of contractors and suppliers but all the amount has to be paid before March 31, 2021,” she added.
