‘Loan cover of ₹50,000 crore for sustenance and recovery of firms dented by COVID-19’

‘Loan cover of ₹50,000 crore for sustenance and recovery of firms dented by COVID-19’

The Union Cabinet on Wednesday approved an enhancement in the Emergency Credit Line Guarantee Scheme (ECLGS) of ₹50,000 crore, raising its limit to ₹5 lakh crore, with the additional amount being deployed for enterprises in hospitality and related sectors that were hit hard by the COVID-19 pandemic.

As of August 5, loans of ₹3.67 lakh crore have already been sanctioned, under the ECLGS which was introduced to provide guarantees for additional credit requirements of businesses affected due to lockdowns and disruptions since the onset of the pandemic in 2020.

Acknowledging the severe disruptions caused by the COVID-19 pandemic on hospitality and related enterprises, the Cabinet decided that the additional amount of ₹50,000 crore would be made applicable to enterprises in hospitality and related sectors till March 31, 2023. This step was announced in this year’s Union Budget.

“The enhancement is expected to provide much needed relief to enterprises in these sectors by incentivizing lending institutions to provide additional credit of up to ₹50,000 crore at low cost, thereby enabling these business enterprises to meet their operational liabilities and continue their businesses,” the Finance Ministry said in a statement.

With high immunisation levels and unwinding of restrictions amid an ‘overall economic recovery, conditions are in place for sustained growth in demand for these sectors as well’, the Ministry said. The pandemic had adversely affected contact-intensive sectors, and demand continued to be subdued for them even as other sectors returned to the recovery path faster.

Justifying the need for interventions for such businesses’ ‘sustenance and recovery’, the Ministry added that their revival was also necessary for supporting the overall ecomomic rebound, taking into account their high employment intensity and their direct as well as indirect linkages with other sectors.

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By Dipak

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