Finance minister Nirmala Sitharaman in her Budget 2022 has announced that the ECLGS scheme will be extended till March 2023. In order to support Covid-hit MSMEs further, the government in September had announced an extension of its Emergency Credit Line Guarantee Scheme (ECLGS) till 31 March, 2022, or till guarantees for an amount of Rs 4.5 lakh crore are issued under the scheme, whichever is earlier.
Further, the guarantee cover for the scheme will be expanded by Rs 50,000 crore to Rs 5 lakh crore.
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The ECLGS was launched by the government as part of its Rs 20 lakh crore comprehensive package, which was announced by the Finance Ministry on May 13, 2020.
It is short for Emergency Credit Line Guarantee Scheme. It was launched by the government in May 2020 following the outbreak of the pandemic to provide relief to micro, small and mid sized firms hit the hardest by the pandemic. This scheme was part of the Rs 20 lakh crore called the Atmanirbhar Bharat Abhiyaan for COVID relief.
Under the scheme, borrowers could avail additional credit of up to 20 percent of their overall outstanding credit as on February 29, 2020. The loans were collateral free and fully guaranteed credit form firms with an outstanding credit of up to Rs 25 crore as of February 29, 2020, with an annual turnover cap of Rs 100 crore for the financial year 2019-2020. The ECLGS initially had a repayment period of four years.
Later, the limits were revised. Outstanding credit was increased from Rs 25 crore to Rs 50 crore. Also, the annual turnover amount was raised to Rs 250 crore from Rs 100 crore. A condition for availing this loan was that the account should not be 60 days past its due as of 29th February, 2020.
The credit scheme was also available for individual borrowers if the loan was availed for their own business and for borrowers under the Pradhan Mantri Mudra Yojana (PMMY).
Trade, hotels, transport, communication and services related to broadcasting have been particularly hit, where output remains below pre-pandemic (2019-20) levels by as much as 8.5 per cent points. Output in most other sectors have recovered above pre-pandemic levels with recovery in agriculture being the strongest. In order to support Covid-hit MSMEs the government had introduced the scheme.
Earlier today, Sitharaman met President Ram Nath Kovind ahead of the Budget presentation. She was accompanied by Ministers of State for Finance Pankaj Chaudhary, Bhagwat Karad and other officials from the Ministry.
In an attempt to go green, the Union Budget for 2022-2023 was presented in a paperless format. Sitharaman read out the Budget at the Parliament through a tab, instead of the traditional ‘bahi khata’.
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