Unveiling the second stimulus package to bail out the Indian economy from the COVID pandemic-led disruptions, Finance Minister Nirmala Sitharaman on Monday announced measures worth $6.64 Billion.
Announcing the package, Sitharaman said, “We are making proposals to stimulate demand in the economy. The proposals pertain to consumer spending and capital expenditure. COVID-19 has adversely impacted the economy. Supply constraints have been erased but consumer demand still needs a push.”
Announcing the decisions, Sitharaman said the measures will not put an additional debt burden on the exchequer in the current financial year (April 2020 – March 2021) and the total debt of $164.38 billion for the year will remain unchanged.
The federal minister also said that the measures will not impact inflation.
The package includes a mega push to infrastructure projects to boost the economy.
Sitharaman has announced interest free loans worth $1.64 Billion to the state governments, and additional infrastructure spending of $3.42 billion by the central government till 31 March.
“The state government will not be required to service the debt for the next 50 years. Repayment of the debt will begin only after the end of the 50-year period. The states will have to utilise the interest-free debt by 31 March next year,” Sitharaman said.
The minister also enhanced the allocation on infrastructure for the current financial year by $3.42 billion.
“Additional budget will be provided for capital expenditure on roads, defence, infrastructure, and water, among others,” said Sitharaman.
Bonanza for Government Staff
Finance Minister Sitharaman has also announced a hiring spree for government employees who will get a festival advance prepaid credit card worth INR 10,000 ($137) for spending the amount during the upcoming festive season.
Announcing the decision, she said the employees will have to spend the amount before 31 March next year and the interest free advance will be recoverable in 10 installments.
In order to boost consumption in the economy, the minister also announced the government will be giving cash equivalent to the Leave Travel Concession entitled to the employee, which would lapse as travel is restricted on account of COVID-19 pandemic.
An employee opting for the scheme will be required to buy goods and services worth three times the fare and one time the leave encashment before 31 March.