Government announces Rs 10,000 interest-free festival advance to employees

LTC cash voucher scheme special festival advance scheme government employees LTC savings

"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".

Prime Minister Narendra Modi has said that today's announcements by Finance Minister Nirmala Sitharaman are timely moves which will boost consumer spending and sentiment as well as push capital expenditure.

Chandrajit Banerjee, director general of CII, said: "The two-pronged strategy will provide a huge impetus to spending both by consumers and government which in turn will accelerate economic activity". Under this, an employee gets LTC in a block of four years (one to travel anywhere in India & one to the home town, or two to the home town). The money can thereafter be used by them towards discretionary spending.

"If the central government opts for it, it will cost around Rs. 5,675 crore". The total expenditure works out to Rs 4,32,000 plus GST amount of Rs 1,03,680, the report said.

The Centre on Monday announced fresh stimulus for the economy, focussing demand. If the private sector also chips in, additional demand for an equal amount can be expected. AdvertisementThe Special Festival Advance Scheme was a part and parcel of government employees pay package up until the 6th Pay Commission.

"A prepaid Rupay card will be given to the availees as an interest-free advance for use in any festival".

To aid the economy, bruised by the coronavirus pandemic, the Centre on Monday announced a few measures for government employees.

In yet another step, the Special Festival Advance Scheme for government employees was restored as a one-time affair.

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Festival advance along with other similar advances were abolished on the recommendations of 7th Pay Commission. Now, the employees will be required to spend three times the fare and one-time of leave encashment to avail the benefit of the scheme. She said of the Rs 12,000 crore, Rs 1,600 crore will be given to north-eastern states and Rs 900 crore will be for Uttrakhand and Himachal Pradesh.

Union finance minister Nirmala Sitharaman addresses a press conference, in New Delhi, October 12, 2020.

The interest-free loan will be recovered in 10 instalments next year, officials said. LTC Cash Voucher Scheme The new LTC Cash Voucher Scheme divides the LTC fare component into three flat-rate slabs depending on the class on entitlement.

"Taking all these into account, Rs 40,000 crore is the maximum additional cash outgo of the Centre during the current fiscal, which is around 0.21 per cent of GDP".

At least 50 per cent of the loan will be granted initially and the balance will be allotted after use of the first instalment. The unutilised funds will be reallocated.

This capital expenditure will be spent on roads, defence infrastructure, water supply, urban development, and domestically produced capital investment.

"All these measures are likely to create an additional demand of Rs 73,000 crore ($9.96 billion)", Ms Sitharaman said, adding the proposals would stimulate demand in a "fiscally prudent way".

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