NEW DELHI: FINANCE Minister Nirmala Sitharaman on Monday announced a slew of measures to boost spending. These include Rs 25,000 crore additional capital expenditure by the Centre, Rs 12,000 crore interest-free loan for states to spend on infrastructure, cash vouchers in place of leave travel concession and a one-time interest-free festival advance of Rs 10,000 each to government and PSU staff.
States can repay the loan in one bullet payment after 50 years. Out of the Rs 12,000 crore loan, north-eastern states will get Rs 1,600 crore, while Uttarakhand and Himachal Pradesh will receive Rs 450 crore each. Rest of the states will get their share from Rs 7,500 crore, in accordance with the devolution formula used by the Finance Commission.
The remaining Rs 2,000 crore will be given to states that fulfil reforms prescribed in the Atmanirbhar package, such as power distribution reforms, implementation of one-nation-one-ration card scheme etc.
“The loan will have to be spent entirely on new or ongoing capital projects, (and) can be used to settle bills of contractors and suppliers but all the amount has to be paid before March 31, 2021,” Sitharaman said. The Rs 25,000 crore additional capital expenditure will be spent on building roads, ports and defence projects.
Government employees can use the LTC cash vouchers to buy goods worth three times the travel fare and one time the leave encashment before March 31, 2021. The condition is the goods should attract a GST of 12% or more. “Only digital transactions are allowed, GST invoice has to be produced,” the FM said, adding this will boost sales of electric appliances and consumer durables.
The one-time Rs 10,000 festival advance to central government employees will be given as a Rupay card, whose cost will be borne by the Centre. The government had earlier discontinued the practice of offering festival advances, which were then meant only for junior employees. This time, however, it will be for all employees, regardless of their rank.
“Government employees and organised sector workers have escaped the economic effects of the pandemic. Their salaries are protected and savings have increased. They need to be incentivised to spend,” Sitharaman said, adding that through these measures, there could be an estimated Rs 1 lakh crore boost to consumer spending, but in a fiscally prudent way, without any requirement of extra borrowing.
According to her, the estimated cost of LTC cash voucher scheme for the central government is Rs 5,675 crore for PSBs and for PSUs it is Rs 1,900 crore, while advance payment will have no impact as it will be repaid in 10 instalments.