Govt to spend ₹37,000cr, give sops to spur festive demand

Govt to spend ₹37,000cr, give sops to spur festive demand

Cash-For-LTC & ₹10K Advance For Central Staffers

TIMES NEWS NETWORK

New Delhi:13.10.2020

Finance minister Nirmala Sitharaman on Monday announced additional allocation of Rs 37,000 crore towards capital expenditure, and put money into the pockets of government employees ahead of the festival season, hoping to trigger demand of Rs 1 lakh crore in her latest bid to revive economic activity.

The much-awaited “stimulus”, however, did not have measures to address the lack of demand in sectors such as hospitality and tourism.

PM Modi consulted his top economic advisers in July on boosting spending on core sector projects in a bid to spur demand for cement, steel and other inputs, which culminated in this announcements.

Centre hopes states, pvt cos too will offer LTA scheme

The additional capex and leave travel concession and festival loan benefits for central government employees come with riders, and the impact will depend on how many employees opt for this scheme. For instance, the Rs 25,000 crore allocation for additional capex by Marchend will be made for defence infrastructure, roads, water supply and urban development, provided the equipment is manufactured locally.

There was another Rs 12,000 crore support to the states, which is to be provided in the form of interest-free loans for 50 years. But the rider is that the money has to be spent by March and there is a Rs 2,000 crore allocation for states which meet three of the reform criteria announced earlier such as power sector reforms or one-nation one ration card related initiatives.

Similarly, those availing of the LTC benefit need to spend three times their entitlement in purchasing cars, fridge, mixers or vacuum cleaners. The measures marked the government’s fresh efforts to revive sentiment and give some push to the economy which has been battered by the Covid-19 induced lockdown and growth has plunged nearly 24% in the June quarter and full year GDP contraction is estmated at 9.5% in the current fiscal year.

Along with the conditions, Sitharaman has placed a lot of reliance on state governments and the private sector taking a cue from the Centre and come up with similar schemes.

Full report on www.toi.in

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