NEW DELHI, Oct 13 (Reuters): India has announced steps to stimulate consumer demand, including advance payment of a part of the wages of federal government employees during the festival season and more capital spending as it tries to bolster the pandemic-hit economy.
The government will allow its employees to spend tax-exempt travel allowances on goods and services, Nirmala Sitharaman, India’s finance minister told a news briefing.
She said the government will also shore up investment by spending extra 250 billion rupees (US$3.41 billion) on roads, ports and defence projects, and offering 120 billion rupees in interest-free 50-year loans to state governments for spending on infrastructure before March 31,2021.
“All these measures are likely to create an additional demand of 730 billion rupees (US$9.96 billion),” Sitharaman said, adding the proposals would stimulate demand in a “fiscally prudent way.”
Prime Minister Narendra Modi’s government, which imposed a tough lockdown to stem the