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.