To revive the economy battered by the second wave of coronavirus pandemic and subsequent lockdown, finance minister Nirmala Sitharaman announced eight key measures on Monday. The Centre will expand Rs 1.1 lakh crore guarantees on loans to businesses severely affected by coronavirus pandemic. Out of this, health sector will get a guarantee of Rs 50,000 crore for ramping up medical infrastructure. The Centre also increased the limit of Emergency Credit Line Guarantee Scheme (ECLGS) to Rs 4.5 lakh crore from the existing Rs 3 lakh crore. Travel and tourism sector has been severely hit by two waves of coronavirus pandemic. The central government on Monday announced once the visa for international travel will start, the first five lakh tourists will get tourist visas free of charge. “The scheme would be applicable till March 31, 2022, or till 5 lakh visas are issued, whichever is earlier. This would incentivise short-term tourists visiting India,” she said. The government will also provide working capital or personal loans to people in the tourism sector to restart businesses impacted due to Covid-19. “The focus is on new lending, and not repayment of old loans,” Sitharaman added. Pradhan Mantri Gareeb Kalyan Yojana was extended from June 30, 2021 to March 31, 2022. Sitharaman also announced a credit guarantee scheme to facilitate loans to 25 lakh borrowers under micro finance institutions (MFIs). Guarantee will be provided to scheduled commercial banks for loans to new or existing NBFCs or MFIs for lending upto Rs 1.25 lakh.
“The announcements providing support to the healthcare sector is therefore timely. Shortage of infrastructure in tier 2 and 3 was a gap that was starkly visible during the last year. Allocation of funds for this as well as easing availability of cheap finance for private sector investment in it are welcome steps. Specific focus on pediatric care will hopefully cater to some long term improvements in this segment,” said Charu Sehgal, partner, Deloitte India.
Credit Guarantee Scheme for Health Sector
Aimed at up scaling medical infrastructure targeting underserved areas.
-Guarantee cover for expansion and new projects related to health/medical infrastructure in cities other than 8 metropolitan cities.
-Guarantee coverage: 50% for expansion & 75% for new projects
-For Aspirational Districts, guarantee cover of 75% for both new projects and expansion.
-Maximum loan: Rs. 100 crore; Guarantee duration: Up to 3 years
-Interest rate capped at 7.95%
-Guarantee by National Credit Guarantee Trustee Company Limited
On Health Care Centre
Finance Ministry announced Rs 15,000 crore emergency health systems project led to 25 fold increase in coroanvirus dedicated hospitals, setting up of 7,929 Covid health centres, 9,954 Covid care centre, 7.5 times increase in oxygen supported beds, 42 fold increase in isolation beds, 45 fold increase in ICU beds.
Financial Support for Covid-hit Sectors on Card
In the wake of second wave of coronavirus pandemic and subsequent lockdowns to prevent the virus spread, the recovery process from the devastating impact of first wave of COVID-19 has become difficult for many sectores. They have urged the government to announce a “substantial” stimulus package to support economic growth hit by the pandemic.
'Bad Bank' has been Set Up Within Months
The new 'Bad Bank' would be set up "within the next one or two months", financial services secretary Debashish Panda told Moneycontrol on February 2. The new Development Finance Institution (DFI) announced by the finance minister will be called the 'National Bank for Financing, Infrastructure, and Development'.
The ECLGS scheme aimed to provide Rs 3 lakh crore worth of collateral-free, government-guaranteed loans to micro, small and medium enterprises (MSMEs) across India to mitigate the distress caused by the coronavirus-induced lockdown. Now the government is planning to raise the limit of ECLGS to Rs 5 lakh crore, according to reports.
What is ECLGS Scheme?
To provide support to industries severely affected by coronavirus pandemic, the Union government announced an Emergency Credit Line Guarantee (ECLGS) Scheme last year.
The ECLGS aims to provide 100 per cent guaranteed coverage to the banks, non-banking financial institutions (NBFCs) and other lending institutions in order to enable them to extend emergency credit to business entities that have suffered due to the Covid-19 pandemic and are struggling to meet their working capital requirements.