INSUBCONTINENT EXCLUSIVE:
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.
