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Last updated: 13 Oct, 2020  

India.Growth.9.Thmb.jpg Fresh stimulus for economy

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Bikky Khosla | 13 Oct, 2020

The Centre on Monday announced a host of stimulus measures, raising hopes that the upcoming festive season would bring good news for the economy. Noticeably, while the "Atmanirbhar Bharat" package unveiled in May was targeted to address the supply-side concerns, the steps announced now seek to push demand. No doubt, this is a welcome move, which, along with the RBI monetary measures announced last week, is expected to push the economic growth trajectory in coming months.

First, a 'LTC Cash Voucher Scheme' and a 'Special Festival Advance Scheme' have been announced. Under the first scheme, Central government employees get LTC in a block of four years, while under the second, gazetted and non-gazetted officers can avail special interest free festival advance of Rs 10,000, which will be recoverable in 10 installments. Experts view that with millions of government employees likely to benefit from these schemes, consumer demand will get a big boost as well.

The Centre also announced a 50-year interest free loan worth Rs 12,000 crore for states for capital projects, comprising Rs 1,600 crore for north-eastern states; Rs 900 crore for Uttarakhand and Himachal; Rs 7,500 crore for other states, and Rs 2,000 crore for states which meet at least three out of four reforms announced earlier. In addition, it was announced that the Centre's capital expenditures budget will be increased by Rs 25,000 crore this year, along with Rs 4,13,000 crore already provided in the budget.

Meanwhile, the central bank last week kept the repo rate unchanged at 4 percent, but it decided to continue with the accommodative stance, and announced a slew of measures, including conduct of a Rs 1 lakh crore on-tap Targeted Long Term Repo Operations, purchase of government securities under open market operations for an aggregate sum of Rs 20,000 crore, and extension of the dispensation of the enhanced HTM limit, etc. These decisions are highly appreciable.

I invite your opinions.

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