The Central Finance Ministry announced a new LTC (Leave Travel Concession) cash voucher scheme along with a special festive advance of Rs 10,000 to all government employees. Union Finance Minister Nirmala Sitharaman said that these new proposals have been put in place to increase demand by front-loading part of the expenditure.
The LTC Cash Voucher scheme will allow government employees to receive cash totalling the LTC and three times the ticket fare. However, the ministry said that only digital transactions will be allowed and GST invoices will have to be produced. Further, employees can only buy items that have a GST of 12% or more.
Central Government employees receive LTCs every four years with one reserved for their hometown and another to any destination of their choice. “Indications are that the 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,” Sitharaman said on Monday.
The ministry added that the LTC Cash Voucher Scheme is expected to create additional consumer demand to the tune of Rs 28,000 crore. “Central government payout on cash-in-lieu-for-LTC will be Rs 5,675 crore, and another Rs 1,900 crore will be payout by central PSUs and public sector banks,” Sitharaman added.
Other benefits for central government employees include the interest-free advance of up to Rs 10,000 bundled with a RuPay Card. This will be done at a cost Rs 4,000 crore, while it is said that it could go up to Rs 8,000 crore if state governments follow suit.
“The interest-free advance of Rs 10,000, to be spent by March 31, 2021, is to be paid back in 10 instalments. The government will bear the bank charges in this regard,” the Finance Minister said.
50-year Interest-free Loans to States
The finance ministry has also announced a new loan of Rs 12,000 crores that will be provided to states for infrastructure projects with an aim to revive the economy. The ministry also said that Rs 1,600 crores from the overall loan amount will be kept aside for north-eastern states of the country while Himachal Pradesh and Uttarakhand will receive Rs 900 crores.
Further Rs 7,500 crores from the pool will be distributed between the rest of the states while the remaining Rs 2,000 crores will be handed over to states that fulfil pre-stated reforms.
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“The loan will have to be spent entirely on new or ongoing capital projects. States can settle bills of contractors and suppliers but all the amount has to be paid before March 31, 2021,” Sitharaman said.
Lastly, Rs 25,000 crores will be spent by the Central Government for the development of roads, defence infrastructure, urban development, and water supply. The finance ministry added that this will be in addition to the Rs 4.13 lakh crores already set aside for the same purpose.
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