The government on Tuesday indicated more stimulus to boost the demand can be given. “We are not closing the option of another stimulus,” a senior government official said without giving much details.

It is expected that next set of stimulus will focus on boosting further demand.

The government on Monday announced LTC cash voucher scheme along with restoration of festival advance for the Central government offices and employees beside capital expenditure along with interest free advance to State. All these estimated to boost demand by ₹73,000 crore. If private sector also doles out LTC cash voucher, entire amount will go up to ₹1-lakh crore.

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Staff can buy goods for LTC amount, to get festival advance; States to receive Rs 12,000 cr

Asked if the government come out with new tax notification related with LTC cash voucher scheme for the private sector, the official said it will depend upon the response from the private sector. There is also no clarity on whether people who have opted lower income tax regime in lieu of foregoing all exemptions will enjoy the latest benefit.

LIC IPO

As regards non-tax revenue for the current fiscal, the official said, “LIC IPO is on card, it is just a matter of time”.

On IDBI Bank’s residual stake sale, the official said it is on track. The government has already sold 51 per cent of its stake in IDBI Bank to LIC but still holds 47 per cent.

The government will soon come out with a new public sector enterprises policy that will define strategic sectors that will not have more than four PSUs. As part of the ‘Atmanirbhar Bharat Abhiyan’ package, the Finance Minister in May had announced that there will be a maximum of four public sector companies in strategic sectors, and state-owned firms in other segments will eventually be privatised.

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The Centre’s latest stimulus to boost demand is interesting, but the capex boost is underwhelming
For an economy that registered a 20 per cent real fall in Q1 in private consumption, this scheme can make a difference if government employees bite the bait