Finance Minister Nirmala Sitharaman on Monday came out with a scheme to boost demand in the market by giving money to the central staff to spend during the upcoming festival season. The scheme envisages an interest-free festival advance of Rs 10,000 to each Central Government employee and cash payment of their LTC (Leave Travel Concession) for the 2018-21 block to the tune of 10-day leave encashment plus eligible travel fare.
There is, however, a rider. Those opting for the scheme will have to submit GST invoices for purchase of goods or services amounting to three times the value of travel fare in addition to the value of LTC encashment amount, Sitharaman told a Press conference here.
She said the amount has to be spent for goods or services attracting GST of 12 per cent or more from a GST registered vendor, hoping that this will boost the demand. Her estimate is to boost the demand by Rs 73,000 crore as she has also asked the states to implement the scheme at their level.
Additionally, Rs 37,000 crore will be infused in capital expenditure by the Centre and the States, she said.
The scheme proposed by her will cost nearly Rs 5,675 crore to the Centre. If it is uniformly implemented by the state governments as well, an overall additional consumer demand of Rs 28,000 crore will be generated. Hoping that half of the states will adopt the scheme, it will infuse nearly Rs 8,000 crore more in the demand sector, Sitharaman said.
In her announcement towards special assistance for states for utilisation under capital expenditure, the Finance Minister informed that special interest free loans with a 50 year repayment term and amounting to 12 thousand crore rupees will be disbursed. Under the assistance scheme, Rs2,500 crores will be given to the North Eastern States and the two northern states of Himachal Pradesh and Uttarakhand. Rs 7,500 crore will be given to other states in proportion to their share in Finance Commission devolution.
The Minister also announced that an additional amount of 25 thousand crore rupees will be provided by the Centre through capital expenditure on roads, defence infrastructure, water supply, urban development and domestically produced capital equipment.