The scheme is unlikely to work unless the government decides to pay the GST portion in excess of the eligible amount of charges.
Union Finance Minister Nirmala Sitharaman is all set to launch the LTC Cash Ocher Scheme for Central Government Employees. However, employees should note that the scheme has some restrictions. Finance Minister Nirmala Sitharaman on Tuesday announced the LTC cash voucher scheme for government employees, however, the tag of the scheme was ‘conditional’. The SBI Ecowrap report states that the scheme is unlikely to work unless the government decides to pay a portion of the GST in excess of the eligible amount of charges like many PSU banks. Furthermore, since the LTC also covers dependent family members, the drawdown on personal income will be huge, the report said. The research report estimates that only 10-15 percent of employees will use the scheme.
The LTC cash voucher scheme was far from realistic in design, contrary to demand, the SBI Ecorop report said. Under the current circumstances, employees are more likely to think in terms of savings … The report said that the scheme would completely ignore the proposal to increase consumption. That said, employees with a proposal are more inclined toward savings. An advance of Rs 10,000 before the festival is also expected to lead to some additional income beyond the current income. This is where demand can be expected to increase through prudent consumption, the Ecorop report said. It said most people would be able to draw in November. However it has to be repaid in a maximum of 10 installments, of which 4 installments will be repaid during this financial year. This is Rs. 2,400 crore.
The Center will have to pay Rs 25,000 crore in cash from the budget allocation for capital expenditure. Also, the states will have to repay a debt of Rs 12,000 crore. Taking all these into account, the Center will have to pay an additional Rs 40,000 crore in the current financial year. Meanwhile, the SBI research report said it expects the new measures to be delayed a lot.
