The Central Government is unlikely to extend the Emergency Credit Line Guarantee Scheme (ECLGS) beyond 31 March, 2023, according to a CNBC-TV18 report.
The report says that 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.
However, an official decision on matter is is yet to be taken.
The finance ministry had called a meeting last month with the heads of public sector banks and top four private sector lenders to review the progress of ECLGS to help businesses affected by Covid-19.
The guarantees amounting to ₹3.61 lakh crore have been issued under the ECLGS, benefiting 1.19 crore borrowers as on 1 January this year, the government had stated in parliament.
The overall ceiling initially announced for ECLGS was ₹3 lakh crore which was subsequently enhanced to ₹4.5 lakh crore.
ECLGS shielded MSMEs from financial distress
The ECLGS has shielded India’s micro, small and medium enterprises from financial distress, with their quick recovery supported by “remarkably high” credit growth, reflected in the rise of goods and services tax paid by the units, according to the Economic Survey 2022-23 tabled in Parliament.
India has more than six crore micro, small and medium enterprises that employ close to 12 crore workers across sectors and industries while contributing nearly 35 per cent to the country’s gross domestic product (GDP).
In FY21, the government announced the ECLGS, which succeeded in shielding micro, small and medium enterprises from financial distress.
As per the survey, “The credit growth to the micro, small and medium enterprises sector has been remarkably high, over 30.6 per cent on average during January-November 2022, supported by the extended ECLGS of the Union government”.
“The recovery of MSMEs is proceeding apace, as is evident in the amounts of Goods and Services Tax (GST) they pay, while the Emergency Credit Linked Guarantee Scheme is casing their debt servicing concerns,” it added.
Source from: https://www.livemint.com/news/india/centre-unlikely-to-extend-eclgs-beyond-31-march-says-report-11678969551638.html