Nirmala Sitharaman's consumption boost of Rs 1 lakh crore to Indian Economy
Published On: Monday, October 12, 2020 | By: Team KnowMyStock
FM Nirmala Sitharaman today (12th Oct.2020) announced measures to stimulate consumer spending and capital expenditure that would generate demand of Rs 1 lakh crore, including the private sector, and in turn, help the growth of gross domestic product (GDP). A leave travel concession (LTC) cash voucher scheme and special festive advance scheme for government employees are expected to generate additional consumer demand of Rs 36,000 crore, the government said, pegging the numbers on conservative estimates. Capital expenditure by Centre and states is likely to generate demand of about Rs 37,000 crore. “Given that private-sector spending through LTC tax benefit would be at least Rs 28,000 crore, we estimate total demand boost due to today's measures to be more than Rs 1 lakh crore,” Sitharaman said, after elaborating on the measures.
The finance minister also revived the special festival advance as a one-time exception under which all Central government employees can avail Rs 10,000 on interest-free basis up till March 31, 2021 which can be repaid in 10 installments. “This will be given in a pre-paid Ru-Pay card which can be spent on anything but cash cannot be withdrawn,” she said, adding that bank charges will be borne by the government.
In addition,the government issued a 50-year interest-free loan of Rs 12,000 crore for capex for states across the country. North East, Uttarakhand and Himachal Pradesh will get Rs 2,500 crore while all other states will get Rs 7,500 crore in proportion to their share in the Finance Commission devolution.
"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,” Sitharaman said.
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