A far more confident, poised and assertive Nirmala Sitharaman looked nothing like the fumbling FM just a few months ago when she announced the first fiscal package. The almost ₹1 trillion of spending plus infra push announced can be criticized by arguing that the government is not really spending anything much. And where is the ₹10 trillion that all the NRI economists are so fond of recommending? But if we stop being attached to seeing an actual spend from the government coffers and look at what the FM is trying to do, putting our political biases aside, then the story that emerges looks like this to me.
First, the package announced is this: Central government and central government enterprise employees can choose to either lapse their LTA this financial year or get the benefit in cash equal to leave encashment plus three times ticket fare. ₹10,000 worth of festival advance will be available for all such employees. State governments and the private sector can also do the same. For an infrastructure push, a ₹12,000 crore zero-interest 50-year loan to the states is being given and another ₹25,000 crore as a capital expenditure boost to the existing ₹4.13 trillion already announced in Budget 2020-21. The value of these measures is about ₹1 trillion. The sleight of hand is that this will be spent without the government actually spending that much more.