73 crore push for economy but no consensus on GST
The central government on Monday announced a ₹73,000 crore demand push to the economy but no consensus to break the deadlock between the central government and those of states and UTs over mode of payment of GST compensation, Union Finance Minister Nirmala Sitharaman after another GST Council meeting.
By the end of Monday’s meeting 12 states had accepted the centre’s payment proposal – to borrow from the markets on their own account – but nine others stood their ground and insisted the centre do the borrowing.
Overall 21 states – mostly those ruled by the BJP or those that have supported it on various issues – have agreed to borrow. Ms Sitharaman has asked for time to consider the demands of the nine states who refused to do so after today’s meeting.
Earlier in the day finance minister announces govt employees LTC CASH scheme and other measures push for economy .
“Measures by the government to stimulate demand must not burden the common citizen with future inflation and must not put government debt on an unsustainable path. Today’s solution should not cause tomorrow’s problem,” finance minister Nirmala Sitharaman said, explaining the government’s philosophy behind Monday’s measures.
RBI on Friday announced a slew of steps to reduce borrowing costs to revive the economy without cutting policy rates, and also for the first time admitting that the economy will contract 9.5% in this fiscal year with a mild expansion in economic activity in the March quarter.
The government’s announcements to boost consumer demand such as leave travel concession (LTC) cash voucher scheme ( ₹5,675 crore) and special festival advance scheme ( ₹4,000 crore) are mostly frontloading expenditure with balancing offsetting changes later that will directly benefit over 11 million central government employees.
The central government employees who have not availed of LTC in the past four years, including FY21, can utilize the scheme if they agree to digitally spend three times the airfare or rail fare and the full amount of total leave encashment before 31 March on purchases attracting minimum 12% good and services tax (GST).
Under the special festival advance scheme, an interest-free loan of `10,000 to all central government employees will be offered as a one-time facility to be recovered in a maximum of 10 instalments.
The Centre is also encouraging state governments and private organizations to give similar facilities to their employees.
Sitharaman suggested that the government has targeted this well-off category of central government employees to boost demand as they have escaped the adverse economic effects of the pandemic with their salaries more or less protected and savings increased.
