Budget 2022: Credit line scheme for small firms extended

NEW DELHI: Finance minister Nirmala Sitharaman on Tuesday announced in the Budget that the Emergency Credit Line Guarantee Scheme (ECLGS) for small companies will be extended by a year up to March 2023. She said the guaranteed cover will be expanded by ₹50,000 crores to a total of ₹5 lakh crore with the latest focus on sectors such as hospitality.

HT reported on December 10 that the government may extend the ₹4.5 lakh crore sovereign-guaranteed credit facility for small businesses to the next financial year as the pandemic is not yet over and the scheme has been successful in providing liquidity support to over 10 million enterprises, protecting about 54.5 million jobs.

The ECLGS, which was due to end on March 31, has now been extended to the next financial year as several small firms, particularly in the service sector, still, need such liquidity support in the wake of new Covid variants.

HT reported on December 10 that the extension of ECLGS with certain modifications is under consideration and an announcement to this effect is possible in the Budget. A corpus of about ₹1.6 lakh crore is still available under the scheme.

ECLGS is one of the key components of the ₹20 lakh crore economic stimulus package under the Atmanirbhar Bharat Abhiyan (self-reliant India campaign) launched in mid-May last year offering additional working capital finance in the form of a term loan to MSMEs and professionals. Initially, its corpus was ₹3 lakh crore, which was raised to ₹4.5 lakh crore in June this year after the second Covid-19 wave when Sitharaman announced the fourth stimulus package worth ₹6.29 lakh crore.

Under ECLGS, loans worth over ₹2.82 lakh crore have been sanctioned to about 11.5 million borrowers so far, and ₹2.28 lakh crore has been disbursed benefiting 9.52 million units. “The scheme has been able to provide much-needed liquidity support to pandemic-hit small units. Although the economy has bounced back, several such firms, particularly those in the service sector still need such credit support as the potential threat of new variants cannot be ruled out completely,” an official said, requesting anonymity.