Policy

Amid second wave, pandemic-hit sectors seek a bailout package from government

Our Bureau Mumbai | Updated on April 29, 2021

CREDAI and the Retailers and Tour Operators’ associations have sought help from the govt   -  Shivendu Jauhari

Many businesses have reached out to RBI for revamping of loan accounts

Industry players in sectors including tourism, retail and real estate have approached the government seeking a bailout plan as they struggle to survive the second phase of the lockdown. Owing to the uncertainty created by the rising Covid-19 cases, several businesses and financial institutions have already approached the RBI for restructuring of loan accounts to avoid a looming threat of NPAs.

Various demands

The real estate industry body CREDAI said in a statement, “The reluctance of banks and other financial institutions to lend to the real estate sector is hindering its revival. The government must proactively direct banks to extend extra credit under the ECLGS scheme and implement the infrastructure status already given to affordable housing projects.” The body added that “recasting SMA-1 & SMA-2 (non-standard) accounts and expanding the scope of SMA to accommodate accounts that are default for more than 90 days” are some of CREDAI’s long-standing demands, in the wake of the pandemic.

The Retailers Association of India has appealed to the Finance Minister for urgent intervention, to prevent the sector from slipping into “a position of irretrievable financial damage”. Kumar Rajagopalan, CEO, Retailers Association of India said, “With zero revenues, retailers are still expected to pay overheads such as salaries, electricity and rentals. If a timely relief package is not provided by the government to ease the financial stress, then the industry will find it hard to survive this second wave.”

The Indian Association of Tour Operators (IATO) on Wednesday said that it has written to Prime Minister Narendra Modi, asking his intervention for a “suitable amendment to conditions imposed by the National Credit Guarantee Trustee Company Ltd (NCGTC) in implementation of the Emergency Credit Line Guarantee Scheme (ECLGS)”. The scheme provides travel operators access to easy emergency credit with the government standing as guarantor.

According to ICRA, contact-intensive sectors like travel, hospitality and retail continue to face severe disruptions in the second wave, and their recovery timelines to be further pushed back by these rising infections.

K Ravichandran, Deputy Chief Ratings Officer, ICRA Ltd said that six sectors, namely, aviation; hotels, restaurants and tourism; media and entertainment exhibitors; microfinance institutions; real estate-retail; and retail, will be at high risk from the second pandemic wave, much lower than in 2020.

Published on April 28, 2021

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