The government on Monday announced two measures aimed at increasing consumer spending — the LTC Cash Voucher scheme and Special Festival Advance Transfer scheme.
The schemes primarily focus on offering cash benefits to central government employees as the government believes that it will lead to higher consumer spending during the festive season. Both schemes that were announced offer direct cash benefits to central government employees.
Here is all you need to know about the two schemes aimed at boosting spending:
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LTC Cash Voucher scheme
The LTC (Leave Travel Concession) Cash Voucher scheme was the first benefit announced by Finance Minister Nirmala Sitharaman today.
LTC is usually granted to central government employees for travelling to various parts of the country and home as well. This is made available every four years. Under LTC, central government employees get reimbursement on air or rail fare as per pay scale or entitlement. In addition, the leave encashment of 10 days (pay + DA) is paid.
However, due to the prevailing Covid-19 situation, employees in the current block of 2018-21 are not in a position to avail LTC for travel. Therefore, the government has decided to let such employees avail a cash benefit in exchange for travel reimbursement under the LTC Voucher scheme.
An employee opting for this scheme will be required to buy goods and services worth three times the fare and one time the leave encashment, according to the finance ministry.
To avail the scheme, the money must be spent on goods attracting 12 per cent GST or more from a registered vendor. The transaction has to be through digital modes only. The GST invoice of the product will be needed for obtaining benefits of the LTC Cash Voucher.
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If eligible central government employees opt for it, the cost will be around Rs 5,7675 crore. Employees of PSBs and PSUs will also be allowed to use the facility and the estimated cost for them will be Rs 1,900 crore.
The tax concession will be allowed for state government and private sector too. So employees entitled to private sector companies currently entitled to LTC can avail the benefit, subject to following guidelines of the central government scheme.
The Centre expects the LTC Voucher scheme to create additional consumer demand worth Rs 28,000 crore. However, Sitharaman said that this calculation has been made on a “conservative” basis.
Special Festival Advance Scheme
The second benefit announced for central government employees is the Special Festival Advance scheme. It may be noted that the festival advance scheme was abolished on the recommendations of the Seventh Pay Commission.
However, the government has decided to restore festival advance to government employees for festivals up to March 31, 2021. Central government employees will be able to get an interest-free advance of Rs 10,000 to be recoverable in a maximum of 10 instalments.
That means all central government employees will be eligible to get Rs 10,000 which will be pre-loaded in a Rupay card. The bank charges for the card will be borne by the government.
A total of Rs 4,000 crore is likely to be disbursed for the scheme. Centre has also encouraged the state governments to do the same.
If the state governments also offer the benefit, another Rs 8,000 crore is likely to be disbursed, assuming 50 per cent of it (Rs 4,000) will come from the states.
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