The Union cabinet chaired by Prime Minister Narendra Modi on Wednesday approved a proposal to increase the limit of the Emergency Credit Line Guarantee Scheme (ECLGS) by Rs 50,000 crore to Rs 5 lakh crore.
The additional amount is exclusively intended for companies in the catering industry and related sectors.
“The increase has been made due to the severe disruptions caused by the COVID-19 pandemic on hospitality and related businesses,” an official statement released after the union cabinet meeting.
ECLGS is a continuous scheme. The additional amount of Rs 50,000 crore would be applied to enterprises in the hospitality and related sectors until the validity of the scheme, which is March 31, 2023, the statement said.
ECLGS is an already operational system and due to the disruptions caused by the COVID-19 pandemic in the hospitality industry and related sectors, the government has specifically earmarked an amount of Rs 50,000 crore for enterprises in these sectors.
The improvement is expected to provide much-needed relief to companies in these sectors by incentivizing credit institutions to provide additional credit of up to Rs 50,000 crore at a low cost, enabling these companies to meet their operational obligations and continue their business.
Loans of about Rs 3.67 Lakh crore are sanctioned under ECLGS until August 5, 2022, according to a statement from the Ministry of Finance.
The ongoing pandemic has hit the contact-intensive sectors, especially the hospitality and related sectors, more severely. While other sectors were back on the recovery path more quickly, demand for these sectors remained subdued for a longer period of time, suggesting that appropriate interventions are needed for their livelihoods and recovery. Given their high employment intensity and their direct and indirect links with other sectors, their revival is also necessary to support the general economic recovery.
Recognizing this, it was announced in the Union Budget 2022-23 to extend the validity of ECLGS until March 2023 and increase the limit of guaranteed coverage of ECLGS by Rs 50,000 crore to a total coverage of Rs 5 Lakh core, with the additional amount being exclusively intended for companies in the hospitality and related sectors.
“With high immunization levels, gradual reversal of restrictions and general economic recovery, the conditions are in place for continued growth in demand for these sectors. This additional warranty coverage is also expected to support the recovery of these sectors. support these sectors,” said the Ministry of Finance.
(This story was not edited by DailyExpertNews staff and was generated automatically from a syndicated feed.)