Govt stimulus scheme will not help economy: Congress

The Congress has criticised the expenditure stimulus extended by the government to its employees ahead of the festive season. The party said this is not going to help the economy and "today's problems could become tomorrow's nightmares"

Addressing a press conference, Congress leaders Gourav Vallabh and Praveen Chakraborty said that "the LTC is to boost the hospitality and tourism industry and now the government is asking to spend it on FMCG."

"There was no extra spending to boost demand and the increase in states' capital expenditure is paltry and untimely. This is yet another vindication that the Modi government is at its wits' ends when it comes to managing the economy." said Ballabh.

This means that the government is ignoring the tourism sector and killing it.

The party said that only money in the hands of the people can stimulate demand. It should truly be cash in hand and not diversion of cash from one area to another like in the case of the LTC Cash voucher scheme and Festival advance. The Finance Minister forgot the most basic lesson about money - it is fungible.

Praveen Chakravorty said, "Unless there is additional money, the individual is not going to spend more. So, where is the question of a demand stimulus?"

The Government has announced that in the festive season its employees will receive an interest-free advance of Rs 10,000 each that will help generate demand worth Rs 8,000 crore in the Covid affected economy. Employees will get a pre-loaded Rupay Card of the advance value, which they would have to spend by March 31, 2021.

The amount spent would be recoverable in 10 instalments. The bank charges for the issue of the card will be borne by the government.

With a view to boost consumer demand and revive the economy which has been subdued amid the pandemic, Finance Minister Nirmala Sitharaman on Monday announced a slew of measures to stimulate expenditure by the public.

As per the minister, the scheme would ensure digital mode of payment, resulting in tax revenue and encouraging honest businesses. But unlike the LTC scheme, consumers would be free to spend the amount on items of their choice irrespective of GST applicability.

The Congress said that it is also a clear admission that the much hyped Rs 20 lakh crore "Atmanirbhar" plan announced by the Prime Minister in May is a dismal failure in protecting and reviving India's ravaged economy.