Nirmala Sitharaman announces major schemes to boost demand by Rs 73,000 crore in FY21

Finance Minister Nirmala Sitharaman today announced major schemes to boost demands in the country by nearly Rs 73,000 crore by March 31, 2021.

Addressing a media briefing in the National Capital today, the minister laid out the details of the fiscally prudent proposals to stimulate demand in the economy. Ms. Sitharaman informed that the new proposals aim at giving a thrust of around Rs 36,000 crore to the consumer demands (Rs 28,000 crore through the Leave Travel Concession (LTC) Voucher Scheme and Rs 8,000 crore through Festival advance scheme). Additionally, she said, Rs 37,000 crore will be infused in the capital expenditure by the Centre and the State Governments.

Briefing about the schemes, the Minister informed that in lieu of the LTC for the 2018-21 block term, payments will be made to the government employees for their 10 days Leave encashment and eligible travel fare. She informed, the employees opting for the scheme will have to submit GST invoices for the purchase of goods or services amounting to three times the value of travel fare in addition to the value of LTC encashment amount. She said, the amount has to be spent on goods or services attracting GST of 12 per cent or more from a GST registered vendor.

The Finance Minister informed that the new proposal is likely to cost nearly Rs 5,675 crore to the Central Government. She said, if the proposals are uniformly implemented by the State governments, overall additional consumer demand to the tune of Rs 28,000 crore will be generated. Under the special festival advance scheme, Ms. Sitharaman said, an interest-free advance of Rs 10,000 will be made available to all government employees. She said, considering 50 per cent states as well adopt the scheme, it is likely to infuse nearly Rs 8,000 crore in the demand sector.

Office of Mr Anurag Thakur in a tweet said, "Special interest-free 50-year loan to states for Rs 12,000 crore capital expenditure. White heavy check mark Rs 200 crore each for 8 North-East states. White heavy check mark Rs 450 crore each Uttarakhand, Himachal. White heavy check mark Rs 7,500 crore for remaining states, as per @15thFinCom devolution."

In her announcement towards special assistance for states for utilisation under capital expenditure, the Finance Minister informed that special interest-free loans with a 50-year repayment term and amounting to Rs 12,000 crore will be disbursed. Under the assistance scheme, Rs 2,500 crore will be given to the North Eastern States and the Northern States Himachal Pradesh and Uttarakhand. Rs 7,500 crore will be given to other states in proportion to their share in Finance Commission devolution.

In another tweet, the Office of Mr Anurag Thakur said, "Central Government will make an enhanced budget provision of Rs 25,000 crore for roads, infrastructure, urban development, water supplies, etc."

The Minister also announced that an additional amount of Rs 25,000 crore will be provided by the Centre through capital expenditure on roads, defence infrastructure, water supply, urban development and domestically produced capital equipment.