Union Finance Minister Nirmala Sitharaman addressed the media on key economic issues on Monday. At a press conference on October 12, the union minister announced two schemes. She said festival advance was discontinued from the 6th Pay Commission for central government employees. But as a one-time measure, an interest-free advance will be given to all officers and employees of the central government.
Sitharaman further announced a Rs 12,000 crore interest-free 50-year loan to states for spending on capital projects in a bid to boost the economy.
Key Highlights of the Nirmala Sitharaman’s press conference:
Leave Travel Concession (LTC) Cash Voucher Scheme:
- Finance Minister announced giving out cash vouchers to central government employees this year in lieu of leave travel concession (LTC) fare which could be spent only on buying non-food GST-rated items.
- The consumer spending proposals include an LTC cash vouchers scheme and a special festival advance scheme. The LTC Cash Vouchers scheme is mainly targetted at employees in the government and other organised sectors.
- The LTC allows central government employees to travel in a block of four years – one to anywhere in India and one hometown or two hometown. The air or rail fare, as per pay scale, is be reimbursed and also the employees will get a leave encashment of 10 days (pay+DA) is paid.
Special Festival Advance Scheme:
- Through the Special Festival Advance scheme, all the central government employees will be eligible for an interest-free loan of Rs 10,000 which they will have to utilize on festival-related spending up to March 31, 2021.
- The festival advance earlier from non-gazetted employees was at Rs 4,500. However, this was abolished under the 7th Pay Commission. But the government has planned to revive it as a one-time move to boost consumer spending.
- A special interest-free 50-year loan to states for Rs 12,000 crore capital expenditure to be issued. It has three components- Out of the Rs 12,000 crore, Rs 1,600 crore will be given to north-eastern states and Rs 900 crore will be for Uttarakhand and Himachal Pradesh. Rs 7,500 crore will be for the remaining states. The remaining Rs 2,000 crore will be given to states that fulfill pre-stated reforms.
Estimated cost of LTC Cash Voucher Scheme:
For Central govt. : Rs 5,675 crore
For PSBs & PSUs: Rs 1,900 crore
Tax concessions for LTC tickets available for state government & the private sector too, if they choose to give such a facility, these employees can benefit.