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In a bid to step-up consumer spending and demand, the Finance Minister announced a few government schemes for employees as part of a new economic stimulus package on October 12, 2020. The FM’s press conference sought to address some of the economic issues faced by the country due to the ongoing COVID-19 pandemic. Here are a few important highlights from the media briefing.
The Finance Minister via the press conference announced two major schemes targeting government employees - the LTC cash vouchers scheme and the special festival advance scheme. Here’s an in-depth analysis of these two festival bonanza schemes.
Employees working with the central government of India are entitled to receive Leave Travel Concession (LTC), which is a monetary benefit offered to compensate for the cost of travelling to any place in India. A government employee can claim LTC twice in every block of four years. It covers the rail fare or airfare, in accordance with the employees’ pay scale. Additionally, the LTC also pays out the basic pay plus dearness allowance components of the employees’ salary for up to 10 days as a leave encashment benefit.
Since travelling is not feasible in the current situation due to the risk of contracting COVID-19, many government employees were not able to claim LTC for the current block of four years starting from the year 2018 to the year 2021. Taking this present scenario into consideration, the central government has announced the LTC cash vouchers scheme.
According to this, a government employee that’s entitled to receive a Leave Travel Concession during the current block of four years can opt to receive cash for one LTC claim instead.
Here are some of the key points from this scheme.
Assuming that the employees of all central government institutions opt for this scheme, the total outlay would therefore come up to Rs. 7,575 crores. This scheme is likely to give some much-needed impetus to the economy by boosting the demand by Rs. 28,000 crores.
Since the festival season is just around the corner, the government has proposed a scheme that would enable its employees to receive cash, which they can then redirect use towards the purchase of goods and services.
According to the special festival advance scheme, all non-gazetted employees of central government institutions would receive an advance of Rs. 10,000. However, the amount would be in the form of a pre-loaded RuPay card instead of cash to promote digital spending. The advance amount received by the employees should be used before March 31, 2021. While the special festival advance of Rs. 10,000 does not carry any interest, it has to be paid back by the employees in 10 instalments.
The total estimated outlay for the central government on account of the introduction of this scheme would amount to approximately Rs. 8,000 crores. The government expects that this would directly lead to a demand boost worth Rs. 8,000 crores.
The government of India expects that both of these schemes together would likely usher in a boost in consumer demand to the tune of Rs. 36,000 crores. In addition to these two schemes, the Finance Minister also announced a couple more schemes worth Rs. 37,000 crores with a focus on increasing capital expenditure made by the states and the centre.
The details of these schemes are as follows.
Additional Read: 5 Ways You Can Use Loans to Add Spark to the Festivities
If you’re a private sector employee or a self-employed professional, these schemes may not be directly applicable to you. Nevertheless, you could still splurge and treat yourself a little during this festive season. A personal loan from Tata Capital can help you meet these short-term liquidity needs.
With several advantages like zero collateral requirement, attractive personal loan interest rates, no fees on part prepayments and a quick and simple application process, the personal loan products from Tata Capital are specifically designed to make it easier for you to fulfill your needs and goals.
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