Govt Hopes to Capture Festive Spirit with Incentive for Employees & Another Stimulus Package
The festive season beckons and the government and industry are watching with bated breath to see how consumers respond and whether the markets will be flooded with buyers.
It is the first Diwali and Navratras since coronavirus, and while festivities are likely to be muted, the government and corporate sector hope that purchasing is not muted.
As per trade estimates, 35-40 per cent of sales of consumer durables, electronics products, in particular, takes place during the festival season. Two-wheeler sales go up by 30 per cent during the festive season alone.
However, the industry is not too hopeful. If sales during Ganesh Chaturthi and Onam are anything to go by, the industry has a reason to be nervous. And so does the government. Top government sources have admitted that cess earnings have dipped remarkably and hence, the need to push, so that people have enough cash to go out and buy consumables.
Therefore, an important announcement was made by the Ministry of Finance on Monday and Prime Minister Narendra Modi lauded it. In a year, when Asia’s third-largest economy is headed for its first full-year contraction in decades, India announced an incentive for central government employees ahead of the festival season to boost consumption.
Employees will be paid travel allowance in cash if they promise to spend three times the amount on buying tax-paid goods or services.
This is an obvious attempt by the government to ensure that its employees spend more. But top government sources say they want a similar scheme to be implemented by the state governments as well and, in fact, they have been advised by the Finance Ministry to come up with an equivalent of the LTC scheme and evoke confidence to buy.
However, the big news is that the government is looking at an option of announcing some stimulus package. This could be in the small and medium sectors and with an aim to boost purchases. There have been some proposals which have been given by the NITI Aayog and PM's Economic Advisory Council with a focus on social sector and small sector stimulus.
Another proposal is to monetise some departments and so far, those which have been identified are in railways, defence and BSNL. Monetisation means that assets are sold to earn revenues which the government hopes can be then pumped into the system and hopefully boost sales.
The announcement of a stimulus package may happen soon to capture the festive spirit. With this the government hopes to put the demon of coronavirus-induced recession behind it.