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Government’s latest demand stimulus not enough

New Delhi: As the Finance Minister Nirmala Sitharaman has announced a couple of demand boosting measures along with loans to states for increasing capital expenditure after a lot of anticipation, concerns have again been raised over the adequacy and effectiveness of the measures.

As per stock brokerages, the latest demand-moving measures are insufficient and the results are only going to be “modest”.

Sitharaman announced an ‘LTC Cash Voucher Scheme’ which will be launched with applicability till March 31, 2021. Under the LTC scheme, central government employees get LTC in a block of four years — one travel to anywhere in India and one to hometown or two for hometown visits. Air or rail fare, as per pay scale or entitlement, is reimbursed and in addition leave encashment of 10 days (pay and dearness allowance) is paid.

In this case, the government will make full cash payment on leave encashment and payment of fare in three flat-rate slabs depending on class of entitlement, including making the fare payment tax free.

An employee opting for this scheme would be required to buy goods or services worth 3 times the fare and one time the leave encashment before March 31, 2021. The money must be spent on goods attracting GST on 12 per cent or more from a GST registered vendor through digital mode and GST invoice will be required to be produced.

ICICI Securities said in a report that it is difficult to estimate how many people will avail this scheme. “The requirement to contribute money from one’s own pocket could prove to be a dampener for many,” it said.

The impact of the Rs 73,000 crore package would be marginal, it said, adding that generally capital spending has a much higher multiplier impact on growth and is likely to last longer.

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