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Finance Minister Nirmala Sitharaman is addressing the media on the economic issues facing the country.
Her press conference comes at a time when the country's GDP or gross domestic product contracted a record 23.9 per cent in the April-June period as the quarter fully captured the damage caused by the coronavirus pandemic-related restrictions, and is expected to shrink an overall 9.5 per cent in the current financial year by the Reserve Bank of India.
Economists and analysts await any positive signs in the economy to assess the path of economic revival ahead.
The government is currently in the process of gradually lifting restrictions imposed in late-March to curb the spread of the deadly coronavirus, which has sent an already slowing economy marred by low demand into a standstill.
The Finance Minister's press conference comes ahead of a meeting of the GST or Goods and Services Tax Council due later in the day.Supply constraints eased, but consumer demand still affectedCOVID-19 has adversely affected economy, needs of poor and weak sections of society have been addressed in government's Atma Nirbhar Bharat packageProposals presented today designed to stimulate demand in a fiscally prudent waySome proposals for advancing/front-loading of expenditureOthers directly linked to increase in GDPToday we have some proposals to stimulate demand in economyBroadly classified into two categories: consumer spending and capital expenditureFinance Minister announces LTC Cash Voucher scheme Government employees, many organised sector employees, have escaped economic effects of COVID-19Their salaries have been protected and savings increasedThey need to be incentivised to contribute to demand revival for benefit of less fortunateCentral government staff gets LTC in block of 4 years (one to travel anywhere within country, three to visit hometown)Air/rail fare is reimbursedIn addition, leave encashment of 10 days is paidDue to pandemic, employees not in position to avail of LTC in 2018-21 blockCost estimated at Rs 5,675 crore if central government employees opt for schemeRs 1,900 crore if public sector bank/public sector undertaking employees opt for itGovernment to allow tax concession for state government/private sector (for employees currently entitled to LTC, subject to conditions)Demand infusion in economy by central government/PSU staff estimated at Rs 19,000 croreDemand infusion by state government employees estimated at Rs 9,000 croreAdditional consumer demand generated estimated at Rs 28,000 croreSpecial Festival Advance scheme to be restored (abolished on recommendation of 7th Pay Commission) for festivals till March 31, 2021Interest fee advance of Rs 10,000 recoverable in a maximum of 10 instalmentsIf given by state governments, Rs 4,000 crore expected to be disbursedIf given by all state governments, another Rs 8,000 crore likely to be disbursed Employees to get pre-loaded RuPay card, government to bear bank chargesCapital expenditure to give special assistance to statesSpecial, interest free, 50-year loans to states for Rs 12,000 crore capital expenditurePart 1: Rs 2,500 crore for North EastPart 2: Rs 7,500 crore for other states, in proportion to share in Finance Commission devolution (50% initially, balance after use of first instalment)Part 3: Rs 2,000 crore for states which meet at least 3 out of 4 reforms given in Atma Nirbhar fiscal deficit packageCapital expenditure to be used for new/ongoing capital projects, settling contractors'/suppliers' bills by March 31Funding to be over and above other additional borrowing ceilings given to statesBullet repayment after 50 years, no servicing required till thenCapital expenditure has a high multiplier effectIt will boost GDP, now as well as in futureNew thrust to capex of states and centreCapital expenditure of centre (enhanced budget provision)Rs 25,000 crore additional budget to be provided for spending on roads, defence infra, water supply, urban development, domestically produced capital equipmentEstimate of demand boost: Rs 36,000 crore additional consumer demand (Rs 28,000 crore through LTC, Rs 8,000 crore through festival advance)Rs 37,000 crore central, state capexTherefore, total demand boost worth Rs 73,000 crore estimated by March 2021Supply Constraints Eased, But Consumer Demand Still Affected: Nirmala Sitharaman COVID-19 has adversely affected economy, needs of poor and weak sections of society have been addressed in government's Atma Nirbhar Bharat packageFinance Minister Nirmala Sitharaman Addresses Media On Economic IssuesToday we have some proposals to stimulate demand in economyBroadly classified into two categories: consumer spending and capital expenditure. GST Council Meet Later Today To Discuss Compensation To StatesLater in the day, Finance Minister Nirmala Sitharaman will chair a meeting of the GST Council.
In the GST Council meeting, due at 4 pm, will discuss the issue of funding the shortfall in Goods and Services Tax (GST) revenue to states.Sensex, Nifty Trim Early Gains Domestic stock markets gave up most of initial gains ahead of Finance Minister Nirmala Sitharaman's virtual address to the media on economic issues.
At 12:32 pm, the Sensex index traded 120.77 points - or 0.30 per cent - higher at 40,630.26, while the broader Nifty benchmark was up 13.20 points - or 0.11 per cent - at 11,927.40. Earlier on Monday, the Sensex had surged more than 350 points and the Nifty had climbed above the 12,000 mark for the first time since February 24. Economy To Contract 9.5% In 2020-21: RBIHer press conference comes at a time when the country's GDP or gross domestic product contracted a record 23.9 per cent in the April-June period as the quarter fully captured the damage caused by the coronavirus pandemic-related restrictions, and is expected to shrink an overall 9.5 per cent in the current financial year by the Reserve Bank of India. Finance Minister Nirmala Sitharaman To Address Media On Economic Issues ShortlyFinance Minister Nirmala Sitharaman will shortly address a press conference on the economic issues facing the country.
