LTC Cash Vouchers, Special Festival Advance: FM Announces Schemes to Boost Consumer Spending | Key Points

New Delhi: In a bid to stimulate demand in the economy, the Narendra Modi-led government on Monday announced giving out cash vouchers to central government employees this year in lieu of leave travel concession (LTC) fare which could be spent only on buying non-food GST-rated items. Also Read – With Durga Puja and Ramleela Around the Corner, DDMA Issues Fresh Guidelines With Adherence to COVID-19 Protocols

The announcement was made by Union Finance Minister Nirmala Sitharaman, ahead of the scheduled Good and Services Tax (GST) Council meeting today. “The pandemic has adversely affected the economy. The needs of the poor and weaker sections addressed in various announcements by the govt. Supply constraints have somewhat eased but consumer demand still needs to be given a boost”, said the finance minister. Also Read – India’s COVID-19 Crosses 71 Lakh-mark With 66,732 Fresh Cases; Recovery Rate Nears 87% | Key Points

#WATCH: Finance Minister Nirmala Sitharaman addresses media https://t.co/5hFOxm7BbZ Also Read – Telangana Farmer Who Fasted, Prayed For Trump’s Recovery Dies of Cardiac Arrest

— ANI (@ANI) October 12, 2020

Under LTC Cash Voucher Scheme, government employees can opt to receive cash amounting to leave encashment plus 3 times the ticket fare, to buy items that attract GST of 12% or more. Only digital transactions allowed, GST invoice to be produced, said Sitharaman.

She asserted that if Central govt employees opt for it (LTC voucher scheme), this will cost around Rs 5,675cr.

“The employees of PSBs & PSUs 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 & PSUs will be approx Rs 19,000 cr”, Sitharaman said, adding that even if 50% of the States opt to give this facility, we think that this will bring in Rs 9000 crores.

Notably, every four years, central government employees get LTC to any destination to their choice plus one to their hometown.

Here are the highlights from Sitharaman’s address: 

-LTC Cash Voucher Scheme is the first part of the Modi Govt’s plan to boost consumer spending. It is expected to generate about Rs 28,000 crore worth of demand.

-Centre offers interest-free 50-year loans to States for capital expenditure for Rs 12,000 crores, consisting of three components—Rs 200 crore each for 8 North East states; Rs 450 crore each Uttarakhand, Himachal; Rs 7,500 crore for remaining states.

-The interest-free advance of Rs 10,000 under the Special Festival Advance Scheme to be paid back in 10 instalments: Finance Minister Nirmala Sitharaman

-Special Festival Advance Scheme for non-gazetted employees is being revived as a one-time measure, for gazetted employees too. All central govt. employees can now get an interest-free advance of Rs 10,000, in the form of a prepaid RuPay Card, to be spent by March 31, 2021: FM

-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

-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

-“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”, said the Union minister.