Nirmala Sitharaman Announces eight Major Economic Relief Measures

Finance Minister Nirmala Sitharaman announced on June 28 that ECLGS, the government’s flagship scheme to assist businesses affected by the pandemic, will now have a total outlay of Rs 4.5 lakh crore, up from Rs 3 lakh crore previously. Nirmala Sitharaman, the Union Finance Minister, announced eight economic relief measures on June 28, four of which are “absolutely new” and one of which is “specific to health infrastructure.”

The Finance Ministry announced a Rs 1.1 lakh crore guarantee scheme for COVID-19-affected sectors, with a focus on health and medical infrastructure in all tier-two and tier-three cities. The health-care sector will receive Rs 50,000 lakh crore of the Rs 1.1 lakh crore, while the rest will receive Rs 60,000 lakh crore.

Additionally, with an aim to provide further economic relief to micro, small and medium enterprises (MSMEs) amid the ongoing COVID-19 pandemic, the Centre on June 28 expanded the financial support being provided under the Emergency Credit Line Guarantee Scheme (ECLGS) by Rs 1.5 lakh crore.

ECLGS — the government’s flagship scheme to help businesses hit by the pandemic — will now have a total outlay of Rs 4.5 lakh crore, up from the earlier Rs 3 lakh crore, Finance Minister Nirmala Sitharaman announced on June 28.

“The overall cap of admissible guarantee has been raised from Rs 3 lakh crore to Rs 4.5 lakh crore,” Nirmala Sitharaman said.

ECLGS 1.0, 2.0, and 3.0 have resulted in the disbursal of Rs 2.69 lakh crore to 1.1 crore units by 12 public sector banks, 25 private sector banks, and 31 non-banking financial companies, according to the Finance Minister.

Contact intensive sectors have already been covered by this scheme and will continue to benefit from the ECLGS. The sector has got Rs 4,000 crore in aid from the government through this window so far.

The list of permissible guarantees and loan amounts has also been proposed to be extended above the current level of 20% of due on each loan, according to FM Nirmala Sitharaman.

“Sector-wise economic relief details will be finalised as per evolving needs,” she added.

The Scheme was initially launched as part of the Rs 20 lakh crore COVID-19 relief package called the Aatmanirbhar Bharat Abhiyaan in May 2020.

To alleviate the misery caused by the coronavirus-induced lockdown, it sought to provide Rs 3 lakh crore in collateral-free, government-guaranteed loans to micro, small, and medium enterprises (MSMEs) across India.

As of February 20, 2020, it allowed banks and non-banking financial corporations to provide emergency loan to enterprises of up to 20% of their total outstanding credit. There was a one-year moratorium and a four-year repayment period for these loans.

The ECLGS 2.0 plan, the second iteration of the scheme, was launched in November 2020 to help 26 stressed industries identified by the Kamath Committee, including the healthcare sector. The emergency credit ceiling was increased to 40% of the total outstanding credit in its third major revision.

The Centre had last expanded the Scheme on May 30,  when its scope was widened to cover the civil aviation sector and loans for oxygen generation plants. Its validity was also extended to September 30, 2021, or till guarantees for an amount of Rs 3 lakh crore are issued. Likewise, disbursement under the scheme was permitted up to December 31, 2021.

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