The guarantee cover will now increase by another Rs 50,000 crore, with the move specifically seen benefiting the crippled hospitality sector.
“The ECLGS will be extended up to March 2023 and its guarantee cover will be expanded by Rs 50,000 crore to a total cover of Rs 5 lakh crore, with the additional amount being earmarked exclusively for the hospitality and related enterprises,” Finance Minister Nirmala Sitharaman said in her budget speech. “The hospitality and related services, especially those by micro and small enterprises, are yet to regain their pre-pandemic level of business.”
The ECLGS has provided additional credit to more than
13 million MSMEs to mitigate the adverse impact of the pandemic. Finance Ministry reports showed that disbursements under ECLGS stood at Rs. 2.14 lakh crore, as of July 2, 2021.
“There has been concentrated efforts in the budget to fill the much-needed credit gap for the stressed sector,” said Vikesh Agrawal, CEO,
Ajwa Fintech. “The ECLGS extension, especially for the struggling hospitality sector, was much needed. The sector, however, will take some more time to revive, unlike other sectors.”
She also proposed revamping the Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) scheme, along with allocation of fresh funds. This is expected to facilitate additional credit of Rs 2 lakh crore for Micro and Small Enterprises and expand employment opportunities.
“The extension of the ECLGS comes as a relief to several MSMEs that faced testing times after the pandemic, making them financially fragile,” said Akash Gehani, COO & Co-founder, Instamojo. “With better access to credit, there is hope for the revival of existing businesses, and the creation of new businesses. The ECLGS has by far provided credit for lakhs of MSMEs preventing the sector from moving into the NPA category.”
