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NEW DELHI: Finance minister Nirmala Sitharaman on Monday said an additional budget of ₹25,000 crore will be provided as capital expenditure to develop roads, defence, water supply, urban development and domestically produced capital equipment, to boost economic growth. This will be in over and above the ₹4.13 trillion provided for in the Union Budget for 2020-21.

The government will also give ₹12,000 crore in interest-free, 50-year loan to states for capital projects. Of this, ₹2,500 crore will go to eight northeastern states, Uttarakhand, and Himachal Pradesh and ₹7,500 crore will go to other states in proportion to Finance Commission devolution formula.

The minister said, initially, 50% of the amount will be given to states, and the rest will be allocated once funds are utilised. All the monies will have to be utilised by March 31, 2021.


These funds can be used by states for new or ongoing projects needing funds or for paying off contractors.

“Capital expenditure has a high multiplier effect and raises not only current GDP but also future GDP, making debt more sustainable. Will also give new thrust to states and centre," Sitharaman said announcing slew of measures including leave travel concession (LTC) cash voucher scheme, special festival advance scheme, to spur consumer demand.

“The covid-19 pandemic has adversely affected economy. Supply side constraints have been eased but consumer demand needs boost. (As of now, needs of the poor, weaker sections have been addressed in the Atma Nirbhar Bharat package an its extensions," Sitharaman said.

She added the government will frontload some of its expenditure to stimulate demand while keeping fiscal prudence in mind.


Under the LTC cash voucher scheme, government employees can opt for receiving cash amounting to the leave encashment plus three times the ticket fare to buy goods which attract 12% or more GST.

Only digital transactions will be allowed under the scheme and GST invoice will have to be submitted. Private employees can also avail the incentive if allowed by employers.

"We think the central government workers, in the event that they pick it, will cost ₹5,675 crore. What's more, representatives of PSBs and public division endeavors will likewise be permitted to partake in this and the expense for them would be ₹1,900 crore," Sitharaman said. State government representatives will likewise have the choice to take an interest in the plan, she included. 

A unique celebration advance, given to workers till the sixth Pay Commission, will be resuscitated as a one-time undertaking, and will be accessible for all representatives, the money serve said. Intrigue free development of ₹10,000 will be given to all focal govt representatives which should be reimbursed in 10 portions.


The advance will be given as a prepaid Rupay card up to March 31, 2021, but it cannot be used to draw cash from an ATM.
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