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Centre to give Rs 12,000 crore interest-free 50-year loan to states for capital projects
Finance Minister Nirmala Sitharman on Monday announced a Rs 12,000 crore interest-free 50-year loan to states for spending on capital projects in a bid to boost the economy.
Centre to give cash vouchers to staff instead of LTC this year to boost spending
In a bid to stimulate demand in the economy, the 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.
We estimate that the measures announced today, for boosting consumer spending and capital expenditure, will boost demand by Rs 73,000 crore, to be spent by March 31, 2021, says Finance Minister Nirmala Sitharaman.
The second part of the Centre's plan to boost consumer demand is a one-time restoration of the festival advance for central government employees through the Special Festival Advance Scheme. This is expected to generate at least about Rs 8,000 crore of demand.
Both Part 1 and Part 2 of interest-free loans given to states are to be spent by March 31, 2021. Of this, 50 per cent will be given initially, remaining upon utilization of the first 50 per cent, says FM.
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, says FM Nirmala Sitharaman.
Capital expenditure - money spent on infrastructure and asset creation - has a multiplier effect on the economy, it not only improves current GDP but also future GDP, we want to give a new thrust to capital expenditure of both states and Centre, says FM.
Of this special interest free 50-year loans, first part is of Rs 2,500 crore will be for North East (Rs 1,600 crore), Uttarakhand and Himachal Pradesh (Rs 900 crore). The second part of Rs 7,500 crore will be for other states, in proportion to share in Finance Commission devolution.
FM announces interest-free 50-year loans to states for capital expenditure of Rs 12,000 crore.
Under the Special Festival Advance Scheme, the government will give pre-paid Rupay card that one can spend on buying goods till the next si months. This amount will be interest-free and they can return the amount in 10 instalments.
Tax concessions for LTC tickets available for employees of state government and private sector too, if they choose to give such facility, these employees too can benefit, says Finance Minister.
If central government employees opt for it, the cost will be around Rs 5,675 crore. Employees of PSBs and PSUs will also be allowed this facility and the estimated cost for them will be Rs 1,900 crore.
If the central government and PSUs employees opt for this, it would generate additional spending of Rs 28,000 crore, says Finance Minister.
What is LTC Cash Voucher Scheme?
Under the LTC Cash Voucher Scheme, government employees can opt to receive cash amounting to leave encashment and threetimes ticket fare, to buy something - items which attract GST of 12 per cent or more. Only digital transactions will be allowed under this scheme and GST invoices will have tobe produced.
The government will give cash to central government employees in lieu of LTC ticket fare component for buying items attracting 12% or more GST, says FM.
The leave travel concession (LTC) Cash Voucher Scheme is aimed at boosting consumer spending. "Indications are those savings of govt. and organized sector employees have increased, we want to incentivize such people to boost demand for the benefit of the less fortunate, says Finance Minister.
The proposals to stimulate demand are designed to stimulate demand in a fiscally prudent way. Some of them involve advancing of expenditure, with offsetting changes later, others are directly linked to increasing GDP, saysFinance Minister Nirmala Sitharaman.
FM Sitharaman launches LTC Cash Voucher Scheme and Special Festival Advance Scheme to boost consumer spending.
Today we have some proposals to stimulate demand in the economy, saysFinance Minister Nirmala Sitharaman.
Supply constrains have eased, but consumer demandneeds some boost, says FM Sitharaman.
The Finance Minister starts briefing the media on economic issues.
While some opposition ruled states are demanding that a Group of Ministers be set up to arrive at a decision on the mechanism for funding compensation shortfall, BJP ruled states, which have already opted for the borrowing option given by the Centre, are of the view that they should be given a go ahead so that they can get money quickly.
GST Council to discuss compensation issue for third time in a row today
The GST Council in its meeting on Monday is likely to discuss the suggestion of non-BJP ruled states of setting up a ministerial panel to develop consensus on the issue of compensation, sources said.
The Council, chaired by Union Finance Minister Nirmala Sitharaman and comprising of state finance ministers, will for the third time in a row discuss the issue of funding the shortfall of Goods and Services Tax (GST) revenue of states.
Thefinance minister's address comes ahead of GST Council meeting, which is scheduled from 4-6 pm.
Union Finance Minister Nirmala Sitharaman to address a press conference on economic issues shortly. Stay tuned for live updates.
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