Aviation Ministry seeks to double the loan outstanding limit under ECLGS

The Aviation Ministry has reached out to the Finance Ministry to double the current funding support given to the sector. According to people in the know,  the Aviation Secretary, Rajiv Bansal, has written to the Finance Ministry for doubling the ECLGS (Emergency Credit Line Guarantee Scheme) loan outstanding limit to 100 percent from the current 50 percent.

If approved, airlines will be allowed to avail of additional debt of up to 100 percent of their outstanding credit, subject to a cap of Rs 1,500 crore.

It is learnt that the ask is due to the sharp rise in jet fuel price and the devaluation of the rupee against the dollar which in turn has increased the operating cost of the sector.

However, government sources have also indicated to CNBC-TV18 that this demand might not be taken on board as it it is not fiscally feasible currently.

The borrower limit is capped at Rs 400 crore for aviation under ECLGS 3.0 as of now.

ECLGS was one of the most significant announcements by the government during the peak of the COVID-19 lockdown. Aviation, hotels and tourism are the sectors most hit by the pandemic.

In the last two-and-a-half years, the scheme has come up with regular changes. The off-take under ECLGS 3.0 has been almost negligible and less than 4 percent. The Finance Minister has increased allocation for this scheme by around Rs 50,000 crore in the current Budget. However, the total off-take stands at less than Rs 12,000 crore.