homeeconomy NewsIndia unlikely to extend ECLGS scheme, keen on promoting 'non emergency' funding to MSMEs
India unlikely to extend ECLGS scheme, keen on promoting 'non-emergency' funding to MSMEs
The emergency credit line guarantee scheme (ECLGS) scheme was specifically designed to address the Covid-led business disruptions, especially for the MSMEs and was first announced during the Covid-19 lockdown in May 2020 as an emergency line of credit of Rs 3 lakh crore.
The government is not inclined to continue with the Emergency Credit Line Guarantee Scheme (ECLGS) beyond March 31 2023, sources have told CNBC-TV18.
According to officials, there is no emergency in any of the sectors covered under the ECLGS so there is no logic for another extension and utility of the scheme has passed with the economy recovering. The scheme was specifically designed to address the Covid-led business disruptions, especially for the MSMEs and was first announced during the Covid-19 lockdown in May 2020 as an emergency line of credit of Rs 3 lakh crore.
However, a formal decision on allowing ECLGS to sunset has yet to be taken. There have been contrary demands from the administrative ministry, MSMEs, demanding another extension, as there is ample headroom still available under the scheme.
As on January 1, 2023, guarantees amounting to Rs 3.61 lakh crore have been issued under the ECLGS, benefiting 1.19 crore borrowers, the government had stated in parliament.
The Finance Minister in last year’s Budget had extended the scheme till March 31, 2023. She had said, “Emergency Credit Line Guarantee Scheme (ECLGS) has provided much-needed additional credit to more than 130 lakh MSMEs. This has helped them mitigate the adverse impact of the pandemic. The hospitality and related services, especially those by micro and small enterprises, are yet to regain their pre-pandemic level of business. Considering these aspects, the ECLGS will be extended up to March 2023 and its guarantee cover will be expanded by Rs 50,000 crore to total cover of Rs 5 lakh crore, with the additional amount being earmarked exclusively for the hospitality and related enterprises.”
Meanwhile, in this year’s Budget, the government announced infusing Rs 9,000 crore for revamping another ‘non-emergency’ credit guarantee scheme for MSMEs, which will facilitate additional credit of Rs 2 lakh crore. Officials said that although there is no timeline for this fund infusion in the CGTMSE or Credit Gurantee Trust for MSMEs yet, revamping the ongoing scheme should serve its purpose . As per the Budget, the scheme is to become operational from April 1.
First Published: Mar 16, 2023 1:55 PM IST
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