A ₹60,000-crore loan guarantee scheme for helping sectors hit the hardest by COVID-19 is yet to get off the ground, 52 days after it figured at the top of an economic relief package to cope with the second wave’s shocks.
This proposed credit support was part of a new ₹1.1 lakh crore loan guarantee scheme for COVID-affected sectors, announced on June 28 under a relief package whose financial implications were pegged at nearly ₹6.29 lakh crore by the government.
When asked about the delay in operationalising this scheme, Finance Minister Nirmala Sitharaman told The Hindu that work on it is underway and it shall be notified and implemented soon. “It’s all happening and is in the process,” she said.
Of the ₹1.1 lakh crore additional credit that was to flow to COVID-affected businesses, ₹50,000 crore was earmarked for healthcare projects in non-metro cities and was approved by the Union Cabinet two days later.
For other sectors, including tourism, a ₹60,000 crore loan guarantee scheme was promised with the interest on such loans capped at 8.25%, as opposed to prevalent rates of 10%-11% without such a guarantee. An official statement at the time indicated more decisions may be taken later “based on evolving needs”.
With none of the expected credit flowing to them yet, the Federation of Hotel and Restaurant Associations of India had urged Ms. Sitharaman to intervene to notify the scheme “with immediate effect” in a communique last week. It cited the “colossal damage suffered by the tourism and hospitality sector” after the second wave added to the losses they have suffered since the pandemic’s onset.
The Federation also pointed out that lenders were not processing several members’ and small enterprises’ applications for loan restructuring or assistance under the existing Emergency Credit Line Guarantee Scheme (ECLGS).
The relief package announced in June had enhanced the ECLGS cap from ₹3 lakh crore to ₹4.5 lakh crore, stating that contact intensive sectors are “already covered” under the scheme and “shall be continued”. The Cabinet had approved the expansion of the ECLGS along with the ₹50,000 crore loan guarantee scheme for healthcare sector projects on June 30.
A ₹77.5 crore revival package for the North Eastern Regional Agricultural Marketing Corporation (NERAMAC), which was also included in the ₹6.29 lakh crore relief package, was approved by the Cabinet on August 18.