Nirmala Sitharaman addressing economic crises, announced ₹ 73,000-Crore Measures To Boost Consumer Demand

On Oct 12, 2020

New Delhi: Finance Minister Nirmala Sitharaman addressed the nation on the economic issues facing the country. Today in the press conference highlighted the sinking economy and measures to bring it out of the crisis. Sitharaman also traced on the people who escaped from coronavirus effects including Centre government staff. Finance Minister exclaimed Central government staff will get LTC in 4 years.

The country’s gross domestic product (GDP) clutched a record 23.9 % in the April-June period as the quarter fully captured the damage caused by the coronavirus pandemic induced restrictions, and forecasted to shrink an overall 9.5 %in the current financial year by the Reserve Bank of India. Currently, the government is in the process of gradually lifting restrictions imposed in late-March to curb the spread of the deadly coronavirus which slowed the economy by low demand into a standstill. The public addressing came ahead of a meeting of the GST or Goods and Services Tax Council due later in the day.

The few highlights of Finance Minister Nirmala Sitharaman’s press conference –

Government’s Atma Nirbhar Bharat package has addressed needs of poor and weak sections of society prevailed due to COVID-19
Supply constraints eased, but consumer demand still affected
Proposals presented today designed to stimulate demand in a fiscally prudent way
Few proposals for advancing/front-loading of expenditure and others directly linked to increase in GDP
Broadly classified into two categories: consumer spending and capital expenditure
Finance Minister announces LTC Cash Voucher scheme, Central government staff gets LTC in block of 4 years ( one to travel anywhere within country, three to visit hometown). Due to pandemic, employees not in position to avail of LTC in 2018-21 block
Government employees, many organized sector employees are less affected, which means their salaries have been protected and savings increased. They need to be incentivized to contribute to demand revival for benefit of less fortunate
Rs 1,900 crore if public sector bank/public sector undertaking employees opt for it
Government to allow tax concession for state government/private sector
Demand infusion in economy by central government/PSU staff estimated at ₹ 19,000 crore
Demand infusion by state government employees estimated at ₹ 9,000 crore
Additional consumer demand generated estimated at ₹ 28,000 crore
Interest fee advance of ₹ 10,000 recoverable in a maximum of 10 installments
Employees to get pre-loaded RuPay card, government to bear bank charges
Capital expenditure to give special assistance to states, 50-year loans to states for ₹ 12,000 crore capital expenditure and free of interest,

Ø 2,500 crore for North East

Ø 7,500 crore for other states, in proportion to share in Finance Commission devolution

Ø 2,000 crore for states which meet at least 3 out of 4 reforms given in Atma Nirbhar fiscal deficit package

Bullet repayment after 50 years, no servicing required till then
New thrust to capex of states and centre
Rs 25,000 crore additional budget to be provided for spending on roads, defence infra, water supply, urban development, domestically produced capital equipment
₹ 36,000 crore additional consumer demand (Rs 28,000 crore through LTC, ₹ 8,000 crore through festival advance)
Rs 37,000 crore central, state capex
Therefore, total demand boost worth ₹ 73,000 crore estimated by March 2021