ECLGS helps 87 per cent MSMEs to ease their capital crunch: Survey

New Delhi, Oct 27 (KNN) The Emergency Credit Line Guarantee Scheme (ECLGS) has been able to quench the liquidity thirst of COVID hit Micro, Small and Medium Enterprises (MSMEs) as 87 per cent respondents claimed that the scheme had helped to ease their capital crunch, according to a survey by National Credit Guarantee Trustee Company (NCGTC).

The survey which involved 1857 respondents from MSMEs, other businesses revealed that a majority 59 per cent added that the support would only last up to three months while a much smaller proportion 19 per cent believed that it would ease liquidity problems beyond three months.

Among micro, small and medium units, only 23 per cent and 18 per cent respectively believed the money would support them for more than three months.

“Across activity type, marginally fewer manufacturing units (83 per cent) saw liquidity benefits of GECL (Guaranteed Emergency Credit Line) as compared to retail trade (87 per cent) and services (84 per cent).”

This may have broader economic consequences, according to the survey. The funds were most likely to be used by MSMEs, other businesses to restart their operations (51 per cent) or clear supplier dues (51 per cent).

''However, the unequal distribution of disbursement may defeat the purpose of the ECLGS,'' the survey added.

While 72 per cent respondents getting 59 per cent share of the emergency credit belonged to micro units, 9 per cent respondents with 21 per cent shared of the credit disbursed were from small enterprises while only 2 per cent respondents with 6 per cent share of the disbursed amount represented medium units.

Moreover, in terms of disbursed amount, only 1 per cent respondents got over Rs 10 lakh amount which was 16.2 per cent of the 100 per cent disbursed amount. Similarly, 4 per cent respondents secured credit between Rs 5 lakh and Rs 10 lakh – 20.2 per cent of the disbursed amount, 27 per cent got amount between Rs 1 lakh and Rs 5 lakh – 47.9 per cent of the disbursed amount, 18 per cent received credit between Rs 50,000 and Rs 1 lakh – 10.4 per cent of the total amount, and so on.