New Delhi: The government Monday announced a one-time Rs 10,000 interest-free festival advance to all its officers and employees. The advance is being given as part of plans to increase consumer spending to spur demand in the economy. At a press conference, Finance Minister Nirmala Sitharaman said festival advance was discontinued from VIth Pay Commission for central government employees. But as a one-time measure, an interest-free advance will be given to all officers and employees of the central government, she said.
This Rs 10,000 advance will come as a pre-paid rupay card, which can be availed and spent by March 31, 2021, the finance minister said. The repayment will be in 10 installments, Sitharaman informed. She added that the government is likely to spend Rs 4,000 crore on the project.
Sitharaman also said the government will shore up investment by spending extra Rs 250 billion on roads, ports and defence projects. It will also offer Rs 120 billion in interest-free 50-year loans to state governments for spending on infrastructure before March 31, 2021.
“All these measures are likely to create an additional demand of Rs 730 billion,” Sitharaman said. She stated that the proposals would stimulate demand in a ‘fiscally prudent way’.
Prime Minister Narendra Modi’s government, which imposed a tough lockdown to stem the spread of the coronavirus in March, is pushing ahead with a full opening to try to boost the economy ahead of the usually high-spending festival season, which runs from October to March.
The latest package would not require any extra borrowing by the federal government, Tarun Bajaj, economic affairs secretary at the Ministry of Finance, told reporters.