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FM Sitharaman Announces Festival Advance to Boost Consumer Spending

FM Sitharaman Announces Festival Advance to Boost Consumer Spending

To encourage consumer spending, Sitharaman announced two schemes- a leave travel concession (LTC) cash voucher and special festive advance-mainly aimed at benefitting central government employees

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Centre’s new economic revival package announced by finance minister Nirmala Sitharaman on Monday has sent the message loud and clear—spend to boost the economic growth crippled by the Covid-19 pandemic.

With about 21 million salaried jobs lost, as per Centre for Monitoring Indian Economy (CMIE), and self-employed professionals cash-dry, consumers are still shying away from spending on non-essentials. Even as lockdown restrictions lift and we approach the festive season, data shows consumer spending continues to remain tepid due to the economic uncertainty created by the spread of Covid-19.

The government’s fresh package consists of schemes that aim to stimulate consumer spending and in turn boost the country’s GDP.

FM Sitharaman noted that the schemes are designed in a way that they stimulate demand by advancing some of the expenditures while others are directly linked to an increase in the GDP.

To encourage consumer spending, Sitharaman announced two schemes— a leave travel concession (LTC) cash voucher and special festive advance—mainly aimed at benefitting central government employees.

The LTC cash voucher enables government employees who are eligible to claim LTC to avail leave encashment in place of travel expenses, to buy items that attract 12 per cent or more GST.

“If central government employees opt for it, this will cost around INR 5,675 crore. The employees of PSBs and PSUs allowed to avail this facility, and for PSBs and PSUs the cost will be INR 1,900 crores. The demand infusion in the economy by the central government

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Finance Minister Sitharaman announces proposals to stimulate consumer demand

Finance Minister Sitharaman announces proposals to stimulate consumer demand

New Delhi [India], October 12 (ANI): Trying to give a boost to the plummeting economy, Finance Minister Nirmala Sitharaman on Monday announced two proposals — Leave Travel Concession (LTC) Cash Voucher Scheme and Special Festival Advance Scheme — to stimulate consumer demand.

This comes a few hours ahead of the crucial 43rd Goods and Services Tax (GST) Council meeting to be chaired by Union Finance Minister Nirmala Sitharaman.

The Finance Minister is addressing at a time when the country’s GDP had contracted 23.9 per cent during the April-June quarter. This quarter took the hardest hit of coronavirus-induced lockdown across the country. The Reserve Bank of India has predicted that the whole financial year’s GDP would shrink 9.5 per cent in the current fiscal.

“The COVID-19 pandemic has adversely affected the economy. The needs of the poor and weaker sections were addressed in various announcements by the government. Supply constraints have somewhat got eased but consumer demand still needs to be given a boost,” Sitharaman said during a press conference.

“The proposals being presented are designed in a way that they can stimulate demand by front-loading/advancing some of the expenditure with some offsetting changes. Others are directly linked to an increase in the GDP,” she explained.

Sitharaman said there are indications that savings of government and organised sector employees have increased, “We want to incentivise such people to boost demand for the benefit of the less fortunate. We are presenting two proposals — the Leave Travel Concession (LTC) Cash Voucher Scheme and Special Festival Advance Scheme — to stimulate consumer spending.”

Finance Minister said under the LTC Cash Voucher Scheme, government employees can opt to receive cash amounting to leave encashment plus three times ticket fare, to buy items, which attract GST of 12 per cent or more. “Only digital transactions

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Govt to give cash vouchers to staff in lieu of LTC this year, says Finance Minister Nirmala Sitharaman

Govt to give cash vouchers to staff in lieu of LTC this year, says Finance Minister Nirmala Sitharaman

The Minister has announced a slew of measures to spur spending and stimulate economic demand.

Finance Minister Nirmala Sitharaman unveiled new proposals to stimulate demand in the economy in the wake of the coronavirus pandemic.

Addressing a press conference, Ms. Sitharaman said that she has broadly classified the proposals into two different compartments — consumer spending and capital expenditure.

She said: “There is no gain saying that the pandemic has affected the economy adversely. The needs of the weaker and poor sections have been addressed somewhat in the various packages announced so far. Supply constraints have somewhat eased but consumer demand still needs to be given a bit of a boost. The proposals presented today are defined in such a way — by frontloading some expenditure or advancing some expenditure with some offsetting charges later. The others are directly linked to an increase in the GDP.”

Consumer spending proposals

The Finance Minister said that the consumer spending proposals include a LTC cash vouchers scheme and a special festival advance scheme. The LTC Cash Vouchers scheme is mainly targetted to employees in the government and other organised sectors.

The Minister described the scheme as follows: “Government and many organised sector employees have their jobs and salaries protected and some initial indications suggest savings have increased as many couldn’t spend their usual expenditure during the lockdown.”

She continued: “Central government employees, in a block of four years — between 2017-18 and 2020-21 — employees would have normally availed of one leave travel concession for any destination of their choice plus one visit to their hometown. If they didn’t choose leave travel to one destination of their choice, they would usually go twice to their native village. This would mean air or rail fare as per their pay scale is reimbursed to them.

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