The announcements made by the minister of finance Nirmala Sitharaman on Monday are “timely moves” which may boost demand in economy, Prime Minister Narendra Modi said.
Sitharaman announced a payment of cash in lieu of LTC and Rs 10,000 festival advance to government employees to stimulate consumer demand during the festival season and boost the economy.
“Today’s announcements by FM @nsitharaman Ji are timely moves which may boost consumer spending and sentiment also as push cost . These steps also will boost demand in our economy,” Modi tweeted.
She also announced additional capital spending and Rs 12,000 crore, 50-year interest-free loan to states to boost the economy that has been battered by the pandemic and thus the resulting lockdown.
The government, which had in May announced a Rs 20 lakh crore ‘Aatmanirbhar Bharat’ stimulus, is pushing ahead with a full opening to undertake to boost the economy before the usually high-spending festival season.
A tough lockdown imposed to stem the spread of coronavirus had resulted within the economy contracting by a record 23.9 per cent during April-June.
Together with the loan to states and additional capital spending, Sitharaman said, “very rough estimate is that potential private-sector spending through LTC tax benefit is getting to be a minimum of capable the govt. employee-led demand of Rs 28,000 crore and thus the entire additional demand estimated to exceed Rs 1 lakh crore”.
She further said that the measures by the govt. 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 shouldn’t cause tomorrow’s problem,” she added.
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