Finance Minister Nirmala Sitharaman has declared an extension to the scheme for relief for the COVID affected sectors, which included a total of 8 fresh measures to boost the economy and the nation’s productivity after the devastating second wave of COVID- 19. The 1.1 lakh crore package is aiming to help and support sectors like healthcare, tourism, exports, and aims for the creation of jobs for uplifting the economy that is losing many economists’ faith.
The package is made with focusing largely on raising the healthcare infrastructure by extending guarantees and concessional credit to COVID-hit sectors which are badly trying to recover. Not just healthcare, the additional package also focuses on providing support to small businesses and tourism in both the private and public sectors. A large portion of the package can help revive the severely damaged industries like tourism after the second wave. The government also aims to generate employment opportunities and improve conditions.
The Emergency Credit Line Guarantee Scheme (ECLGS) was revealed as part of the initial Rs 20 lakh crore comprehensive package announced by the Finance Ministry on May the 13th in 2020, to assist Micro, Small and Medium Enterprises (MSMEs) sector and healthcare given the economic anguish caused by the COVID-19 pandemic. As the pandemic started to hit more of the country’s economy, the scheme was extended towards hospitality and tourism.
The main objective of the Scheme is to provide an incentive to Member Lending Institutions (MLIs), i.e., Banks, Financial Institutions (FIs) and Non-Banking Financial Companies (NBFCs) by providing them with a 100 % guarantee.
The finance minister on Monday unveiled the increase in the scope of the scheme from 3 lakh crores to 4.5 lakh crores as the funds already allocated were falling short of the demands. And more will be added on later - “As we progress, depending on the needs coming up from the ground, we will keep changing the coverage of the scheme," the minister said.
With the fresh measures introduced, loan guarantees worth ₹1.1 lakh crores will be offered to covid-affected sectors, which includes ₹50,000 crores to India’s hospitals for expansion and building new facilities in metro and non-metro cities. Since the pandemic hit the country, medical and non-medical staff have been combatants fighting the virus at the frontline. As the third wave is said to have its impact on children more than before, a sum of rupees 23 thousand crores is separately allocated for pediatric care or pediatric hospitals.
A sector that would be protected in the remaining ₹60,000 crore loan guarantee space is tourism. Sitharaman announced that the scheme and the new package is set to deliver the 10,700 registered tourist guides (registered with the state governments or ministry of tourism) will be provided with a maximum loan of ₹1.25 lakhs to individuals and with interest rates 2% less than the maximum rate set earlier in the smallest towns in the country. The interest rates are capped at a maximum of 8.65 per cent for a 10 lakh rupees loan that can be extended to travel agencies under the scheme. The government is also providing free one-month tourist visas to the first 5 lakh tourists to ramp up tourism in the country.
Additional subsidies and free food grains to the country's poor till November of 2021, is also a measure that is being provided by the government, through measures announced on Monday. Other sectors to be supported by ECLGS through MLI’s, are exports and infra as several reforms in those sectors including exports insurance have been declared.
On these announcements, Honourable Prime Minister Narendra Modi reacted on Twitter “Measures announced by FM today will enhance public health facilities, especially in under-served areas, boost private investment in medical infrastructure and augment critical human resources. Special focus is on strengthening healthcare facilities for our children.” And more: -
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