With issues concerning the financial influence of the Omicron variant rising stronger on account of restrictions in varied states, the Centre is more likely to fall again on one in every of its main financial restoration planks – the Emergency Credit Line Guarantee Scheme (ECLGS).
According to extremely positioned sources, the finance ministry is more likely to lengthen ECLGS and different mortgage guarantee schemes for micro, small and medium enterprises (MSMEs), hospitality and tourism sector, and the well being infrastructure past March 31, Business Standard has learnt.
This is more likely to be introduced by Finance Minister Nirmala Sitharaman as a part of her Budget speech on February 1.
To start with, ECLGS for varied sectors could possibly be tweaked and prolonged until June or September.
Discussions are nonetheless ongoing.
The ultimate form of the prolonged schemes will rely upon the finance ministry’s evaluation of how extreme the restrictions in varied states are and which sectors they influence probably the most.
“The credit guarantee schemes for varied sectors have seen an encouraging response.
“We are monitoring varied high-frequency indicators to gauge the influence of curfews and different restrictions in numerous states.
“We are additionally conscious of the issues of the MSME business,” mentioned a senior authorities official.
In September, the federal government prolonged the ECLGS for MSMEs until March 31, 2022.
The cumulative mortgage sanction restrict of ECLGS was expanded earlier to Rs 4.5 trillion, from Rs 3 trillion.
As of November 21, 2021, 64.4 per cent of that prolonged restrict had been sanctioned for disbursement.
Experts say the ECLGS needs to be prolonged for sure sectors.
Moreover, it needs to be focused at sectors which have confronted the brunt of the financial influence of the pandemic waves.
“The schemes needs to be prolonged with a selected focus. If you have a look at varied sectors, possibly everybody wanted assist two years again.
“Some wanted assist one 12 months again, even fewer will want assist right this moment.
“If we will sharpen the main target and assist those that have been impacted considerably, I feel that shall be higher,” mentioned T V Narendran, chief govt officer, Tata Steel, and president of the Confederation of Indian Industry.
“Even in MSMEs, there are numerous who’ve struggled, however there are some who’ve carried out fairly okay.
“Depends upon which sector they’re in,” Narendran advised Business Standard.
A report by State Bank of India’s chief financial advisor Soumya Kanti Ghosh, launched on Thursday, mentioned the ECLGS scheme for MSMEs saved 1.35 million MSME items from going below, saved round 15 million jobs, and prevented 14 per cent of excellent MSME loans from turning into non-performing belongings.
Starting with the Aatmanirbhar Bharat package deal in May 2020, Sitharaman had introduced ECLGS as a part of 4 totally different financial reduction packages until June 2021.
ECLGS 1 offered loans to the smallest MSMEs, with credit excellent of no more than Rs 50 crore.
ECLGS 2 was for sectors recognized by a Reserve Bank of India panel as significantly prone to financial downturn on account of Covid-19 and for the well being care sector, with complete credit excellent between Rs 50 crore and Rs 500 crore.
ECLGS 3 was for corporations within the hospitality, journey and tourism, leisure and sporting, and civil aviation sectors whose previous dues are as much as 60 days as of February 2020.
ECLGS 4 was for hospitals, nursing houses, and medical amenities engaged in manufacturing of liquid oxygen and oxygen cylinders for organising on-site oxygen-producing vegetation.
Under these 4 phases, the lending financial institution or monetary establishment is being offered 100 per cent guarantee on loans they offer out.
Additionally, on June 28, 2021, Sitharaman additionally introduced a brand new mortgage guarantee scheme with further credit of Rs 1.1 trillion, together with Rs 50,000 crore for the well being sector and Rs 60,000 crore for different sectors, together with tourism.
The well being sector part is aimed toward upscaling medical infrastructure focusing on underserved areas.
Under the tourism part, working capital or private loans shall be offered to folks within the tourism sector to discharge liabilities and restart companies impacted as a result of pandemic.
These two parts, legitimate until March 31, 2022, is also prolonged.
Photograph: ANI Photo