A special festive scheme (SFAS) and a new travel concession Cash voucher scheme (LTCCVS) is launched by Finance Minister Nirmala Sitharaman to boost the economy. The reason to launch these programs to promote consumer spending as consumer inflation touched an 8-month high of 7.34% in September to control the rising food prices. This will hope to accelerate consumer spending and capital expenditure. The GDP has already contracted by 23.9 % in the first quarter and expected to 9.8 %.
After continuous lockdown, many business sectors are badly effected and facing low demand than expected. RBI also predicts the economy 9.5% this means the erosion of 20 lakh crore economy. The finance ministry expects that 37000 crores are directed to kick start the capital expenditure in the infrastructure, and defence sector.
Consumer Inflation Percentage Of The Year 2020
- January -7.59
- February- 6.58
- March- 5.84
- May- 6.26
- June- 6.23
- July- 6.73
- August- 6.69
- September- 7.34
For now, among the statements made by Finance minister Sitharaman, the show stoppers were two tweaks — the introduction of the Cash Voucher scheme and rebuilding of the special Festival Advance Transfer scheme. There is a total of 48.34 lakh employees, employed with the central government. The two strategies jointly launched to expect to put Rs 36,000 crore in their hands. The fine print of the LTC scheme pushes the employees to buy goods or services.
This is a type of compensation package for the government employees, where their employers make complete payment on leave encashment and fare. Furthermore, Rs 10,000 interest-free advance loan to be paid by 10 installments. This bracket of ingesting can shore up GST collection by Rs 6,500 crore along with pushing demand and carrying in the multiplier effect of both request generation and government’s incomes.
What Do You Mean By SFAS And LTCCVS
A Special Festival Advance Scheme where government employees will get a pre-loaded RuPay card with the interest-free advance of Rs. 10,000, payable up to 10 installments, and sent by March 2021 as per the concerned festival. At the same time, the LTCCVS will allow getting cash benefits in exchange for purchase which attracts around 12 % GST. In case of any GST shortfall, the center will not pay any shortfall for the state.
The finance minister explained that the government employees and public sector employees who have increased their savings during the COVID-19 lockdown, have to contribute to reviving the economy. These steps were to reduce the economic shortfall and restore the GST collection.