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Tata Capital > Blog > Personal Use Loan > Government to spend Rs 37,000 crore, give SOPs to spur festive demand

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Government to spend Rs 37,000 crore, give SOPs to spur festive demand

Government to spend Rs 37,000 crore, give SOPs to spur festive demand

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. 

Stimulation of consumer demand

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.

1. LTC cash vouchers scheme   

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. 

  • An employee can claim the full leave encashment benefit (basic pay + DA) for 10 days. 
  • The fare for travel would be paid in three flat-rate slabs according to the employee’s pay scale and entitlement. 
  • The amount that is paid as fare for travel shall be completely free from tax. 
  • If an employee opts for this scheme, he or she would have to purchase goods or services that are worth three times the travel fare and one time the leave encashment amount before March 31, 2021.
  • The cash in lieu of LTC offered by this scheme shall be used only to purchase goods or services that attract 12% GST or more. 
  • Additionally, the purchase must be made only from a vendor that is registered under the GST scheme.
  • The purchase should be made only through digital payment modes and a GST invoice corresponding to the purchase will also have to be submitted. 

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.

Additional Read: What are the Measures Taken by the Finance Ministry to Tackle Coronavirus in India?

2. Special festival advance scheme     

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.

3. Measures to boost capital expenditure

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.

  • Incentive to states worth Rs. 12,000 crores
  • Increase in central capital expenditure worth Rs. 25,000 crores

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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