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Cabinet Approves Rs 50,000-Crore Credit Support To Hospitality Sector Under ECLGS

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Cabinet Approves Rs 50,000-Crore Credit Support To Hospitality Sector Under ECLGS

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The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved increasing the limit of the Emergency Credit Line Guarantee Scheme (ECLGS) by Rs 50,000 crore from Rs 4.5 Lakh crore to Rs 5 Lakh crore. The additional amount will be earmarked exclusively for enterprises in hospitality and related sectors, as they were hit the most due to the pandemic-induced disruptions.

“The additional amount of Rs 50,000 crore would be made applicable to enterprises in hospitality and related sectors till validity of the scheme which is March 31, 2023,” according to an official statement.

Loans of about Rs 3.67 Lakh crore have been sanctioned under the already-operational ECLGS scheme till August 5, 2022.

According to the statement, the ongoing pandemic has adversely impacted contact-intensive sectors, especially the hospitality and related sectors more severely. While other sectors were back faster on the path of recovery, demand continued to be subdued for these sectors for a longer period, suggesting the need for suitable interventions for their sustenance and recovery.

“Further, given their high employment intensity and their direct and indirect linkages with other sectors, their revival is also necessary for supporting overall economic recovery. Recognising this, in Union Budget 2022-23, it was announced to extend the validity of ECLGS up to March, 2023 and increase in the limit of guaranteed cover of ECLGS by Rs 50,000 crore to total cover of Rs 5 lakh crore, with the additional amount being earmarked exclusively for the enterprises in hospitality and related sectors,” it added.

With high immunisation levels, progressive roll-back of restrictions and overall economic recovery, conditions are in place for sustained growth in demand for these sectors as well. This additional guarantee cover is expected to support the recovery of these sectors as well.

The ECLGS was announced in May 2020 in wake of the outbreak of COVID-19 to help various sectors, especially in the MSME segment, to get credit at a concessional rate of 7 per cent. Loans of about Rs 3.67 lakh crore have been sanctioned under ECLGS till August 5, 2022. In Union Budget 2022-23, Finance Minister Nirmala Sitharaman had announced extending the validity of ECLGS till March 2023 and an increase in the limit of guaranteed cover by Rs 50,000 crore.

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