What is the outcome of latest LTC package?


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Under this LTC package, those employees who opts for it gets LTC fare and leave encashment directly to their bank account without any need for travel, subject to the condition that - (i) amount equivalent to the leave encashment; and (ii) Three times the amount on LTC fare drawn; shall be spent on Goods & Services, having not less than 12% tax.
Employees can avail LTC till 2021 December this block, so it is clear that Government’s view is to increase cash flow in the economy by way of employee’s consumption, and not to give a ‘benefit’ to the employees, though the Government named the word ‘to incentivize’ in the announcement.
COVID obviously disrupted the already disturbed Indian Economy. The recent economy measures of the Ministry of Finance and freeze of dearness allowance to the employees speaks the situation.
Since this package is released before festivals’ time (Dussehra, Diwali, Pongal) and there is no need to travel anywhere, employees may opt for this package. Since producing bills is a pre-condition, it obviously results in cash flow, may boost the economy a bit, and returns 36% of the money spent by the Government.

The above are my personal views.

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