The interest free advance for government employees will be recoverable in maximum 10 instalments
Finance Minister Nirmala Sitharaman today announced a special Festival Advance Scheme for central government employees revived as a one-time measure. Festival advance along with similar advances were abolished on the recommendation of the 7th pay commission. But to spur consumer demand in an economy hit by coronavirus pandemic, the government decided to restore it as a one-time measure.
"It is recommended to restore festival advance to govt employees for festivals up to 31st January, 2021," the government said.
Here are 5 things to know about the festival advance scheme:
1) Interest free advance of ₹10,000 to be recoverable in maximum 10 instalments
2) This ₹10,000 advance will come as a pre-paid rupay card, which can be availed and spent by March 31, 2021.
3) The government expects to disburse ₹4000 crore under this advance scheme
4) If given by state governments, another ₹8000 crore is likely to be disbursed. Assuming 50% adoption by states the estimate is ₹4000 crore.
5) Additional consumer demand generated will be ₹8000 crore.
To stimulate demand in the economy, the government also announced giving out cash vouchers to central government employees this year in lieu of leave travel concession (LTC) fare which could be spent only on buying non-food GST-rated items.
Finance Minister Nirmala Sitharaman said the employees could buy items that attract 12% or more goods and services tax (GST). These purchases will have to be made in digital mode from GST-registered outlets.
Every four years, central government employees get LTC to any destination to their choice plus one to their hometown.
Since travel is difficult to undertake during the pandemic, the government will pay the entitled fare as cash vouchers which have to be spent by March 31, 2021, she said. Central government payout on cash-in-lieu-for-LTC will be ₹5,675 crore, and another ₹1,900 crore will be payout by central PSUs and public sector banks, the finance minister said. (With Agency Inputs)