Skip to main content

Measures to Boost Consumption Demand and Capital Expenditure


Why in News

 Recently, the government has announced a twin set of measures to boost consumption demand and capital expenditure (Capex), which are estimated to result in quick spending of more than Rs. 1 lakh crore by March 2021.

  • These measures are the Leave Travel Concession (LTC) voucher scheme and a festival advance scheme. Also, measures have been announced to step up Capex by the Centre and the states.

Key Points

  • Aim:
    • Supply constraints in the economy have eased over recent months, but consumer demand remained affected and these measures aim at advancing consumer spending and Capex.
      • Capex steps are “directly linked to an increase in economic output given their high multiplier effect”.
    • The earlier announced Atmanirbhar Bharat package addressed the requirement of essential goods for needy sections of the society and now these measures aim at promoting consumption of high-value items by those employees whose salaries and jobs have not been affected by Covid-19 pandemic.
    • With the participation of the private sector, these will stimulate growth in the economy by advancing the consumption of non-essential, relatively high-value goods and services in the economy.
  • Leave Travel Concession Voucher Scheme:
    • Leave Travel Concession:
      • Central government employees get LTC in a block of four years, one each to a destination of choice and home town or two for home town.
      • Under this, the air or rail fare is reimbursed as per pay scale/entitlement. Also, a leave encashment of ten days (pay+dearness allowance) is paid.
      • However, employees will not be able to avail the LTC in the 2018-21 year block due to the ongoing pandemic and this is where the LTC will benefit government employees.
    • In lieu of one LTC during 2018-21, employees will receive cash payment. There will be full payment on leave encashment and fare will be paid as per three slabs depending upon the class of entitlement. Further, there will be no tax on fare payment.
    • An employee opting for this scheme will have to buy goods and services worth three times the fare and one time leave encashment, and do so before 31st March 2021.
    • The money is to be spent on goods attracting Goods and Services Tax (GST) of 12% or more and only digital payments will be allowed. Also, employees will have to provide the GST invoice.
      • If the amount is not spent then the employee will have to pay tax as per the marginal tax rate on the LTC component.
    • The same benefits will be available to private-sector employees if the employers decide to offer the scheme to their employees and they decide to avail it.
    • Benefits to Economy:
      • The government expects a demand generation of Rs. 28,000 crore (Rs. 19,000 crore from central government employees and the rest from states) in the economy.
      • While GST collections have been severely impacted in the first half of the fiscal due to Covid-19 pandemic, a consumption boost will lift GST collections in the second half of the year as the scheme calls for expenditure to be done till 31st March 2021.
      • If private-sector employees also participate, it may lead to a significant jump in overall consumption and rise in GST collections.
      • Since most employees have not been able to travel after the pandemic, the shifting of the LTC benefit is expected to generate demand elsewhere.
  • Festival Advance:
    • Festival advance, which was abolished in line with recommendations of the 7th Pay Commission, has been restored for one time till 31st March 2021.
    • All central government employees will get an interest-free advance of Rs. 10,000 that will be recovered in 10 instalments. It will be given in the form of a pre-loaded RuPay card of the advance value.
    • The government expects to disburse Rs. 4,000 crore under the scheme by 31st March 2021 and if all states provide similar advances, another Rs. 8,000 crore is likely to be disbursed.
    • This is expected to generate consumer demand ahead of festivals like Diwali.
Labels:

Comments

Post a Comment

Popular posts from this blog

A leaf was plucked from a plant on a sunny day and kept for 2 minutes in boiling water. It was subsequently immersed in boiling alcohol and treated with iodine solution. What will be the final colour of the leaf after the test?

 The final color of the leaf after the described test would likely be a bluish-black color. The process described is a common laboratory experiment known as the iodine test for starch. When a leaf is plucked from a plant, it contains starch. The boiling water breaks down the cell membranes and denatures the enzymes, effectively stopping any metabolic processes. Boiling alcohol acts as a solvent to remove chlorophyll from the leaf. Finally, when the leaf is treated with iodine solution, it reacts with the remaining starch, resulting in the formation of a bluish-black color. This color change indicates the presence of starch in the leaf.
Post a Comment
Read more

Academic Freedom in India

  Why in News? India has scored considerably low in the international  Academic Freedom Index (AFI)  with a score of 0.352. Academic freedom,  in general, refers to a scholar's freedom to express ideas without risk of official interference or professional disadvantage. Points to Remember:- About the Academic Freedom Index: It has been  published by Global Public Policy Institute  as a part of a global time-series dataset (1900-2019) in close cooperation with  Friedrich-Alexander University Erlangen-Nürnberg, Scholars at Risk, and the V‑Dem Institute. It  compares  levels of academic freedom worldwide and enhances the understanding of its curtailments. The AFI used  eight components  to evaluate the scores: the freedom to research and teach, freedom of academic exchange and dissemination, institutional autonomy, campus integrity, freedom of academic and cultural expression, constitutional protection of academic freedom, international...
Post a Comment
Read more

If the red blood cells (RBCs) of human blood are isolated and are diluted in normal saline (an isotonic solution to blood), what will happen to the RBCs?

If the red blood cells (RBCs) of human blood are isolated and diluted in normal saline, which is an isotonic solution to blood, the RBCs will remain intact and maintain their normal shape and function. An isotonic solution has the same concentration of solutes as the cytoplasm of the RBCs. When the RBCs are placed in an isotonic solution like normal saline, there will be no net movement of water across the cell membrane. As a result, the RBCs will neither shrink nor swell, and their osmotic equilibrium will be maintained. The shape of the RBCs, typically biconcave discs, will be preserved, allowing them to continue their vital functions, such as carrying oxygen and carbon dioxide throughout the body. In summary, diluting RBCs in a normal saline solution, which is isotonic to blood, will not cause any significant changes to the RBCs, and they will remain functional and retain their normal shape.
Post a Comment
Read more