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Industry asks FinMin to extend ECLGS to more sectors
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SME Times News Bureau | 08 Nov, 2020
The Confederation of
Indian Industry (CII) has written to the Finance Ministry urging the
government to explore an Emergency Loan Credit Guarantee Scheme (ECLGS)
to support the resource starved stressed sectors.
As per the industry body prolonged strain on employment-intensive stressed sectors could impede overall economic recovery.
In
a statement, CII said that it has recommended this intervention to
assist the stressed segments, primarily in the service sectors like
hospitality, tourism aviation and retail, as this would not have any
impact on the fiscal deficit this year but will provide the much-needed
liquidity to these sectors which employ a large number of people.
"CII
appreciates the revenue constraints faced by the government and its
impact on the widening fiscal deficit. This intervention, similar to
what has been done for the MSMEs will be a win-win for all," Chandrajit
Banerjee, Director General of CII said.
The ECLGS, announced in
May as part of the Atmanirbhar Bharat Package, provides for Rs 3 lakh
crore collateral free automatic loans for businesses including MSMEs.
The scheme has made disbursals of Rs 1.48 lakh crore against sanctions
of Rs 2.03 lakh crore.
The scheme which was to end on October 31 has now been extended to November 30.
CII
said that it is likely that the scheme will utilise around Rs 2 lakh
crore and the unutilised amount of around Rs 1 lakh crore, and an
additional Rs 50,000 crore, if need be, could be used to extend support
to corporates in the stressed sectors, who were earlier not eligible for
the current ECLGS scheme.
This will help the sectors tide over the cash crunch and working capital issues, it said.
One
of the key challenges faced by the stressed sectors is severe liquidity
crunch in the wake of low demand and an ECLGS scheme could help provide
interim liquidity support, till demand recovers.
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