{"id":4394,"date":"2020-10-12T21:35:32","date_gmt":"2020-10-12T16:05:32","guid":{"rendered":"http:\/\/yourcareerheights.com\/?p=4394"},"modified":"2020-10-13T22:46:32","modified_gmt":"2020-10-13T17:16:32","slug":"finance-minister-announces-measures-of-rs-73000-crore-to-stimulate-consumer-spending","status":"publish","type":"post","link":"https:\/\/yourcareerheights.com\/?p=4394","title":{"rendered":"Finance Minister announces measures of Rs 73,000 crore to stimulate consumer spending"},"content":{"rendered":"<div id=\"pl-4394\"  class=\"panel-layout\" ><div id=\"pg-4394-0\"  class=\"panel-grid panel-no-style\" ><div id=\"pgc-4394-0-0\"  class=\"panel-grid-cell\" ><div id=\"panel-4394-0-0-0\" class=\"so-panel widget widget_sow-editor panel-first-child panel-last-child\" data-index=\"0\" ><div class=\"panel-widget-style panel-widget-style-for-4394-0-0-0\" ><div\n\t\t\t\n\t\t\tclass=\"so-widget-sow-editor so-widget-sow-editor-base\"\n\t\t\t\n\t\t>\n<div class=\"siteorigin-widget-tinymce textwidget\">\n\t<p>&nbsp;<\/p>\n<h3>Union Minister for Finance &amp; Corporate Affairs Smt. Nirmala Sitharaman here today announced measures of\u00a0<strong>Rs 73,000 crore to stimulate consumer spending<\/strong>\u00a0in the economy in an effort to fight the slowdown due to COVID-19 pandemic following lockdown.\u00a0Union Minister of State for Finance &amp; Corporate Affairs Shri Anurag Singh Thakur, Finance Secretary Dr Ajay Bhushan Pandey, Department of Financial Services Secretary Shri Debashish Panda and Department of Economic Affairs Secretary Shri Tarun Bajaj were also present during the announcement of stimulus package.<\/h3>\n<p>While announcing the demand stimulus package, Smt. Sitharaman said, \u201cIndications are that savings of government and organised sector employees have increased and we want to incentivise such people to boost demand for the benefit of the less fortunate.\u201d The Finance Minister further said that if demand goes up based on the stimulus measures announced today, it will have an impact on those people who have been affected by COVID-19 and are desperately looking for demand to keep their business going.<\/p>\n<p>The Finance Minister stressed on the idea that today\u2019s solution should not cause tomorrow\u2019s problem. Smt. Sitharaman said that the Government does not want to burden the common citizen with future inflation and also not put the Government debt on an unsustainable path.<\/p>\n<p>The proposals presented today by the Finance Minister are designed to stimulate spending in a fiscally prudent manner as some of the proposals are for advancing or front-loading of expenditure with offsetting changes later while others are directly linked to increase in GDP. The present announcement by Smt. Sitharaman highlights the active intervention by the Government of India to combat economic slowdown created by COVID-19.<\/p>\n<p><strong>Highlights of the Economic Package:<\/strong><\/p>\n<div class=\"text-center\">\n<ul>\n<li><strong>Finance Minister announces measures of Rs 73,000 crore to stimulate consumer spending before end of this Financial Year in fight against COVID-19.<\/strong><\/li>\n<li><strong><span id=\"ltrSubtitle\">Cash payment and leave encashment in lieu of one LTC during 2018-21 according to entitlement.<\/span><\/strong><\/li>\n<li><strong><span id=\"ltrSubtitle\">Special Festival Advance Scheme revived as a one-time measure for both Gazetted and non-Gazetted employees.<\/span><\/strong><\/li>\n<li><strong><span id=\"ltrSubtitle\">Special interest free 50-year loans to States for capital expenditure for Rs. 12,000 crore.<\/span><\/strong><\/li>\n<li><strong><span id=\"ltrSubtitle\">Additional budget of Rs. 25,000 crore, in addition to Rs. 4.13 lakh crore given in Union Budget 2020, is being provided for Capital Expenditure<\/span><\/strong><\/li>\n<\/ul>\n<p>The details are as follows: -<\/p>\n<ol>\n<li><strong>CONSUMER SPENDING<\/strong><\/li>\n<\/ol>\n<ol>\n<li><strong><u>Leave Travel Concession (LTC) Cash Voucher Scheme<\/u><\/strong><\/li>\n<\/ol>\n<p><a href=\"https:\/\/i0.wp.com\/yourcareerheights.com\/wp-content\/uploads\/2020\/10\/Economy-Booster-2.jpg\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-4397 alignleft\" src=\"https:\/\/i0.wp.com\/yourcareerheights.com\/wp-content\/uploads\/2020\/10\/Economy-Booster-2-300x205.jpg?resize=300%2C205\" alt=\"\" width=\"300\" height=\"205\" srcset=\"https:\/\/i0.wp.com\/yourcareerheights.com\/wp-content\/uploads\/2020\/10\/Economy-Booster-2.jpg?resize=300%2C205&amp;ssl=1 300w, https:\/\/i0.wp.com\/yourcareerheights.com\/wp-content\/uploads\/2020\/10\/Economy-Booster-2.jpg?w=680&amp;ssl=1 680w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a>While announcing the scheme, the Finance Minister said, \u201cThe biggest incentive for employees to avail the LTC Cash Voucher Scheme is that in a four-year block ending in 2021, the LTC not availed will lapse, instead, this will encourage employees to avail of this facility to buy goods which can help their families.\u201d<\/p>\n<p>Central Government employees get LTC in a block of 4 years in which air or rail fare, as per pay scale\/entitlement, is reimbursed and in addition, Leave encashment of 10 days (pay + DA) is paid. But due to COVID-19, employees are not in a position to avail of LTC in the current block of 2018-21.<\/p>\n<p><strong>Therefore, the Government has decided to give cash payment in lieu of one LTC during 2018-21, in which:<a href=\"https:\/\/i0.wp.com\/yourcareerheights.com\/wp-content\/uploads\/2020\/10\/Economy-Booster-2.2.jpg\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-4396 alignright\" src=\"https:\/\/i0.wp.com\/yourcareerheights.com\/wp-content\/uploads\/2020\/10\/Economy-Booster-2.2-300x190.jpg?resize=300%2C190\" alt=\"\" width=\"300\" height=\"190\" srcset=\"https:\/\/i0.wp.com\/yourcareerheights.com\/wp-content\/uploads\/2020\/10\/Economy-Booster-2.2.jpg?resize=300%2C190&amp;ssl=1 300w, https:\/\/i0.wp.com\/yourcareerheights.com\/wp-content\/uploads\/2020\/10\/Economy-Booster-2.2.jpg?w=680&amp;ssl=1 680w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/strong><\/p>\n<ul>\n<li><strong>Full payment on Leave encashment and<\/strong><\/li>\n<li><strong>Payment of fare in 3 flat-rate slabs depending on class of entitlement<\/strong><\/li>\n<li><strong>Fare payment will be tax free<\/strong><\/li>\n<\/ul>\n<p><strong>An employee, opting for this scheme, will be required to buy goods \/ services worth 3 times the fare and 1 time the leave encashment before 31<sup>st<\/sup>\u00a0March 2021.<\/strong><\/p>\n<p>The scheme also requires that\u00a0<strong>money must be spent on goods attracting GST of 12% or more from <a href=\"https:\/\/i0.wp.com\/yourcareerheights.com\/wp-content\/uploads\/2020\/10\/Economy-Booster-2.1.jpg\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-4395 alignleft\" src=\"https:\/\/i0.wp.com\/yourcareerheights.com\/wp-content\/uploads\/2020\/10\/Economy-Booster-2.1-300x191.jpg?resize=300%2C191\" alt=\"\" width=\"300\" height=\"191\" srcset=\"https:\/\/i0.wp.com\/yourcareerheights.com\/wp-content\/uploads\/2020\/10\/Economy-Booster-2.1.jpg?resize=300%2C191&amp;ssl=1 300w, https:\/\/i0.wp.com\/yourcareerheights.com\/wp-content\/uploads\/2020\/10\/Economy-Booster-2.1.jpg?w=680&amp;ssl=1 680w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a>a GST registered vendor through digital mode<\/strong>. The employee is required to produce GST invoice to avail the benefit.<\/p>\n<p>If Central Government employees opt for it, cost will be around Rs. 5,675 crore. Employees of Public Sector Banks (PSBs) and Public Sector Undertakings (PSUs) will also be allowed this facility and the estimated cost for them will be Rs. 1,900 crore.\u00a0<strong>The tax concession will be allowed for State Government\/Private<\/strong><strong>\u00a0Sector<\/strong>\u00a0too, for employees who currently are entitled to LTC, subject to following the guidelines of the Central Government scheme.\u00a0<strong>The demand infusion in the economy by Central Government and Central PSE\/PSB employees is estimated to be Rs. 19,000 crore approx. The demand infusion by State Government employees will be Rs. 9,000 crore. It is expected that it will generate additional consumer demand of Rs. 28,000 crore.<\/strong><\/p>\n<div>\n<p><em><strong>Indications are that savings of govt. and organized sector employees have increased, Govt. want to incentivize such people to boost demand for the benefit of the less fortunate. On a conservative basis, it is expected the LTC Cash Voucher Scheme to generate additional consumer demand in the range of \u20b9 28,000 crore.<\/strong><\/em><\/p>\n<\/div>\n<ol start=\"2\">\n<li><strong><u>Special Festival Advance Scheme<\/u><\/strong><\/li>\n<\/ol>\n<p>A Special Festival Advance Scheme\u00a0<strong>for non-gazetted employees, as well as for gazetted employees<\/strong>\u00a0too, is being revived as a\u00a0<strong><u>one-time measure to stimulate demand<\/u><\/strong>. All Central Government employees can now get an\u00a0<strong>interest-free advance of Rs. 10,000, to be spent by 31<sup>st<\/sup>\u00a0March, 2021<\/strong>\u00a0on the choice of festival of the employee. The interest-free advance is recoverable from the employee in maximum 10 instalments.<\/p>\n<p>The\u00a0<strong>employees will get pre-loaded RuPay Card of the advance value<\/strong>. The Government will bear Bank charges of the card. Disbursal of advance through RuPay card ensures digital mode of payment, resulting in tax revenue and encouraging honest businesses.<\/p>\n<p><strong>The one-time disbursement of Special Festival Advance Scheme (SFAS) is expected to amount to Rs. 4,000 crore; and if the SFAS given by all State Governments, another tranche of Rs. 8,000 crore is expected to be disbursed.<\/strong><\/p>\n<ol start=\"2\">\n<li><strong>CAPITAL EXPENDITURE<\/strong><\/li>\n<\/ol>\n<ol>\n<li><strong><u>Special Assistance to the States:<\/u><\/strong><\/li>\n<\/ol>\n<p>While announcing measures related to Capital Expenditure, Smt. Sitharaman said that money spent on infrastructure and asset creation has a multiplier effect on the economy. It not only improves current GDP but also future GDP. The Government wants to give a new thrust to Capital Expenditure of both States and Centre.<\/p>\n<p>Giving a new thrust on Capital Expenditure, Smt. Sitharaman said that money spent on infrastructure and asset creation has a multiplier effect on the economy. It not only improves current GDP but also future GDP. The Government wants to give a new thrust to Capital Expenditure of both States and Centre. Smt. Sitharaman said that\u00a0<strong>the Central Government is issuing a special interest-free 50-year loan to States of Rs. 12,000 crore Capital Expenditure<\/strong>. The Scheme consists of\u00a0<strong>3 Parts<\/strong>.<\/p>\n<p><strong><u>Part - 1<\/u><\/strong>\u00a0of the scheme provides for:<\/p>\n<ul>\n<li><strong>Rs. 200 crore each for 8 North East states (Rs. 1,600 crore)<\/strong><\/li>\n<li><strong>Rs. 450 crore each Uttarakhand, Himachal Pradesh (Rs. 900 crore)<\/strong><\/li>\n<\/ul>\n<p><strong><u>Part - 2<\/u><\/strong>\u00a0of the scheme provides for:<\/p>\n<ul>\n<li><strong>Rs. 7,500 crore for remaining states, as per 15<sup>th<\/sup>\u00a0Finance Commission devolution.<\/strong><\/li>\n<\/ul>\n<p>The Finance Minister said that both Part 1 and Part 2 of interest-free loans given to States are to be spent by 31<sup>st<\/sup>\u00a0March, 2021 and 50% will be given initially, the remaining 50% will be given upon utilization of first 50%. Unutilised funds will be reallocated by the Central Government.<\/p>\n<p><strong>Under\u00a0<u>Part - 3<\/u><\/strong>\u00a0of Rs. 12,000 crore interest-free loans to states,\u00a0<strong>Rs. 2,000 crore will be given to those states which fulfill at least 3 out of 4 reforms spelled out in Aatma Nirbhar Bharat Package (ANBP) vide Department of Expenditure\u2019s Letter F.No. 40(06)\/PF-S\/17-18 Vol. V dated 17<sup>th<\/sup>\u00a0May 2020<\/strong>. Rs 2,000 crore is over and above other borrowing ceilings.<\/p>\n<p>Following are the features of this Scheme:<\/p>\n<ul>\n<li>It can be used for\u00a0<strong>new or ongoing capital projects<\/strong>\u00a0needing funds and \/ or settling contractors\u2019\/ suppliers\u2019 bills on such projects<\/li>\n<li>CAPEX to be\u00a0<strong>spent by 31<sup>st<\/sup>\u00a0March 2021<\/strong><\/li>\n<li>This funding will be\u00a0<strong>over and above all other additional borrowing ceilings<\/strong>\u00a0given to states<\/li>\n<li><strong>Bullet repayment<\/strong>\u00a0after 50 years,\u00a0<strong>no servicing required for 50 years<\/strong><\/li>\n<\/ul>\n<div>\n<p><em><strong>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, the Govt. wants to give a new thrust to capital expenditure of both states and Centre.<\/strong><\/em><\/p>\n<\/div>\n<ol start=\"2\">\n<li><strong><u>Enhanced Budget Provisions:<\/u><\/strong><\/li>\n<\/ol>\n<p>The Finance Minister said that additional budget of Rs. 25,000 crore, in addition to Rs. 4.13 lakh crore given in Union Budget 2020, is being provided for Capital Expenditure on roads, defence, water supply, urban development and domestically produced capital equipment.<\/p>\n<p>To allow smooth conducting of Government business, allocations will be made in forthcoming Revised Estimate discussions of Ministry of Finance with concerned ministries.<\/p>\n<div>\n<p><em><strong>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.<\/strong><\/em><\/p>\n<p><strong>Estimated Impact of Stimulus Measures<\/strong><\/p>\n<p><em>FM estimates that the measures announced, for boosting consumer spending and capital expenditure, will boost demand by \u20b9 73,000 crore, to be spent by March 31, 2021. Given that private sector spending through LTC tax benefit would be at least \u20b9 28,000 crore, estimated total demand boost due to today's measures to be more than \u20b9 1 lakh crore.<\/em><\/p>\n<div>\n<p><em>If demand goes up based on the stimulus measures announced today, it will have an impact on those people who have been affected by COVID-19 and are desperately looking for demand to keep their business going.<\/em><\/p>\n<\/div>\n<\/div>\n<p>It may be recalled that a package of Rs 1.70 lakh crore under Pradhan Mantri Garib Kalyan Package (PMGKP) was announced on 26<sup>th<\/sup>\u00a0March, 2020 and the Aatma Nirbhar Bharat Package (ANBP), a Special economic and comprehensive package of Rs 20 lakh crore - equivalent to 10% of India\u2019s GDP \u2013 was announced on 12<sup>th<\/sup>\u00a0May, 2020 by Hon\u2019ble Prime Minister Shri Narendra Modi. He gave a clarion call for \u0906\u0924\u094d\u092e\u0928\u093f\u0930\u094d\u092d\u0930 \u092d\u093e\u0930\u0924 \u0905\u092d\u093f\u092f\u093e\u0928 or Self-Reliant India Movement and also outlined five pillars of Aatmanirbhar Bharat \u2013 Economy, Infrastructure, System, Vibrant Demography and Demand.<\/p>\n<h4>Opinion of Analysts:<\/h4>\n<div id=\"tie-lb-20201012141852\" class=\"brdr20 lowlighted\">\n<div id=\"lb-584595\" class=\"comment-body-live \">\n<div>\n<div class=\"lvblg-box\">\n<div class=\"heading-lvblg\"><strong>Announcements have come with a 'conditions apply' tag<br \/>\n<\/strong>It is good to hear that the government has turned its attention towards the demand side. However, the announcements have come with a \"conditions apply\" tag. The thought process behind the LTC cash vouchers is to spend the money which ought to have been spent by the Govt or PSBs in the absence of the pandemic. The conditions of 3 times spending of LTC &amp; 1 time of leave encashment on products and services of GST slab rate of 12% dampens the spirit. The condition of the 3 times spending of the LTC would only push the middle class salaried population to postpone the availing LTC to subsequent years in this block. -- Divakar Vijayasarathy, Founder and Managing Partner, DVS Advisors LLP<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<p><strong>Significant impact can only be expected when outlays announced are actually spent<br \/>\n<\/strong>Boosting consumer spending and raising government expenditure are the pillars of any growth revival. Government has taken commendable steps towards increasing demand in the economy. While consumer spending will get some push, a significant impact can only be expected when outlays announced are actually spent and a measurable increase in government spending on infrastructure and related projects takes place. Some revival push can definitely be expected from these measures: Archit Gupta, Founder and CEO - ClearTax.<\/p>\n<div id=\"tie-lb-20201012143342\" class=\"brdr20 lowlighted\">\n<div id=\"lb-584603\" class=\"comment-body-live \">\n<div>\n<div class=\"lvblg-box\">\n<div class=\"heading-lvblg\"><strong>Expecting private sector and state governments to spend cannot be justified<br \/>\n<\/strong>The festival advance with only a single condition of digital spending which is implemented through a rupay prepaid card, without any other frills, is definitely a welcome one and is expected to be well received by the salaried class. However, the estimate of the increase in demand of around Rs 36000 crores as against estimated spending of Rs 11500 crores by the central government seems to be overstated. In the current scenario, expecting the private sector and the state governments to spend a similar amount cannot be justified. Divakar Vijayasarathy, Founder and Managing Partner, DVS Advisors LLP<\/div>\n<div>\n<div id=\"tie-lb-20201012142519\" class=\"brdr20 lowlighted\">\n<div id=\"lb-584597\" class=\"comment-body-live \">\n<div>\n<div class=\"lvblg-box\">\n<div class=\"heading-lvblg\"><strong>Demand for consumer electronics will increase with today's stimulus<br \/>\n<\/strong>We really appreciate FM\u2019s Decision to give vouchers, they will lead to Consumerism. Demand for consumer electronics will increase with this stimulus due to limited choice to spend on travel and other entertainment. So mostly customers will spend on durables especially screens and appliances: Avneet Singh Marwah, Director, and CEO, Super Plastronics Pvt Ltd, a Kodak brand licensee.<\/div>\n<div>\n<div class=\"topPart clearfix tac\">\n<h4 class=\"artTitle font_faus\">Nirmala Sitharaman's announcements will boost demand in economy: PM Modi<\/h4>\n<\/div>\n<div class=\"bylineBox\">\n<div class=\"dt contentwrapper\">\n<div class=\"dtc vam artByline\">\n<div class=\"story_title clearfix\">\n<div class=\"menu_list flt\">Source:https:\/\/pib.gov.in\/PressReleasePage.aspx?PRID=1663722 &amp; https:\/\/twitter.com\/PIBMumbai\/status\/1315551994078285824\/photo\/1\u00a0 ; Financial Express &amp; Economic Times<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<p>&nbsp;<\/p>\n<\/div>\n<\/div><\/div><\/div><\/div><\/div><\/div>","protected":false},"excerpt":{"rendered":"<p>Union Finance Minister announces Stimulus to boost Demand in the Economy: Highlights:\u201cTotal demand boost due to today&#8217;s measures expected to be more than \u20b9 1 lakh crore\u201d.Finance Minister Nirmala Sitharaman also announced additional capital spending and Rs 12,000 crore, 50-year interest-free loan to states to boost the economy that has been battered by the pandemic and the resulting lockdown.<\/p>\n","protected":false},"author":1,"featured_media":4398,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[854,869,860,722,10,37,120],"tags":[934,857,35,935,933,278,932],"class_list":["post-4394","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-covid-19","category-covid-19-2","category-covid-19-regulatory-package","category-economic-reforms","category-economy","category-finance","category-finance-ministry","tag-capex","tag-covid-19","tag-economy","tag-economy-booster","tag-fesivaladvance","tag-finance-ministry","tag-ltc"],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/yourcareerheights.com\/wp-content\/uploads\/2020\/10\/Economy-Booster-2.3.jpg?fit=259%2C194&ssl=1","jetpack_sharing_enabled":true,"jetpack-related-posts":[],"jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=\/wp\/v2\/posts\/4394","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4394"}],"version-history":[{"count":3,"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=\/wp\/v2\/posts\/4394\/revisions"}],"predecessor-version":[{"id":4401,"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=\/wp\/v2\/posts\/4394\/revisions\/4401"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=\/wp\/v2\/media\/4398"}],"wp:attachment":[{"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4394"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4394"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4394"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}