– by Pragya Mishra
Finance Minister Nirmala Sitharaman announced an economic package to boost consumption looking at the festival season ahead. These steps are taken by the government keeping in mind the government employees and the upcoming festive season. The ministry believes that a boost in demand would revive the economic cycle.
To incentivize the government employees, the government introduced the LTC cash voucher scheme which is if the LTC is not availed by 2021, it will not lapse instead it can be used by the employees to buy goods and the government will reimburse them. But the provision of giving a GST voucher of triple the amount and that too only on goods which attract 12% GST or more, is counterproductive as during this pandemic time the employees are already suffering because of the suspension of the dearness allowance till year 2021and expecting them to spend more than double will be quite unreasonable.
The second part of the Modi Govt's plan to boost consumer demand is a one-time restoration of the festival advance for central govt employees through the Special Festival Advance Scheme. This is expected to generate at least about Rs 8,000 crore of demand. pic.twitter.com/YnvdCTsnfE
— NSitharamanOffice (@nsitharamanoffc) October 12, 2020
The second announcement is regarding the festival advancement of Rs. 10000 to all the government employees (Gazetted or non-gazetted) which has to return by the employee in an interest-free manner in 10 easy installments is a welcome step. Although an overall scheme of 4000 crores can hardly be considered as a stimulus for the economy of a scale such as India.
The steps taken by the government can hardly be considered as a stimulus package and are still not addressing the real issue of demand growth in a substantial manner. The advance loan scheme can be considered as good thinking step by is highly inadequate. The aim put forth by FM of creating a business of 1 lakh crores with the help of these announcements as of now seems to be wishful thinking. The government although making all the right noises but still seems to be failing in addressing the issue of demand boost in a substantial and adequate manner.