Revenue department in the Finance Ministry does not see any need to extend beyond March 31 the Emergency Credit Line Guarantee Scheme (ECLGS), which is an MSME support initiative launched by the Government during Covid-19 pandemic times.
The objective of ECLGS was to provide additional liquidity to such units to help them cope with the crisis arising out of Covid-19.
With the economy having fully recovered from the pandemic—as announced in the recent Economic Survey, there is still some uncertainty over the scheme’s extension beyond March 31 this year.
“The ECLGS scheme is still open till March 31. People can still avail of it, and they are not doing it. I think there is no need for any further extension of it beyond March 31,” Sanjay Malhotra, Revenue Secretary, said at a post-Budget interactive session organised by Confederation of Indian Industry in the capital.
He was responding to a question from Ashok Saigal, Co-Chairman, CII National MSME Council, as to whether government was looking to extend the ECLGS scheme beyond March 31, especially when the scheme was so useful for the MSMEs.
The funds allocation is there and NPAs of MSMEs have not really increased but units are using this additional credit window to be more productive, Saigal added.
So far only about ₹3.6 lakh crore of guarantees out of the total ₹5 lakh crore allocated for the scheme has been utilised.
Loans to MSME
Under this ECLGS scheme, loans extended to MSMEs by banks and NBFCs are being 100 per cent guaranteed by the National Credit Guarantee Trustee Company (NCGTC). The loan is being extended in the form of additional working capital term loan facility in case of banks and additional term loan in case of NBFCs to MSMEs and interested Pradhan Mantri Mudra Yojana borrowers.
The validity of ECLGS expires on March 31 this year and the scheme has so far been extended twice — first time in September 2021 when the government had extended the validity of ECLGS till March 31, 2022, or till guarantees for an amount of ₹4.5-lakh crore are issued under the scheme, whichever is earlier. Last year, in Union Budget 2022-23, it was announced to extend validity of ECLGS upto March 2023 and the limit of guaranteed cover was increased by ₹ 50,000 crore to total cover of ₹ 5 lakh crore, with the additional amount being earmarked exclusively for the enterprises in hospitality and related sectors.