New Delhi, 07 April (H.S.):

The ongoing conflict in West Asia continues to pressure India's economy, severely impacting manufacturing, supply, and service sectors. In response to this crisis, the Central government is poised to announce a major relief package soon.

Authorities have finalized the draft for the Special Credit Guarantee Scheme, valued at ₹2.5 lakh crore. Expected to receive Cabinet approval shortly, this package draws inspiration from the 2020 Emergency Credit Line Guarantee Scheme (ECLGS) during the COVID-19 pandemic but features a significantly larger scope and budget.

Experts indicate the scheme will provide financial assistance to all sectors affected by the war, particularly those grappling with disrupted supply chains and escalated costs. The initiative aims to alleviate liquidity crunches through targeted support.

Under the package, the National Credit Guarantee Trustee Company (NCGTC) will offer a 90% credit guarantee on loans to companies. This means the government will cover 90% of banks' losses if borrowing firms default on repayments, enabling banks to lend confidently without additional collateral requirements.

Like ECLGS, no extra security or guarantees will be needed from borrowers. The scheme proposes a four-year tenure, with up to one year moratorium on principal repayment while mandating regular interest payments.

Unlike the MSME-focused ECLGS, this relief extends beyond micro, small, and medium enterprises to all war-impacted sectors. A substantial portion remains reserved for MSMEs to combat liquidity issues, alongside aid for firms facing raw material shortages and import-export hurdles.

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Hindusthan Samachar / Jun Sarkar