To help the stressed sectors find their way out of woods, Confederation of Indian Industry (CII) has urged finance ministry to consider the viability of rolling out Emergency Loan Credit Guarantee Scheme (ECLGS). CII has argued that prolonged strain on employment-intensive sectors could impede economic recovery. It said on Sunday that it has recommended this intervention to assist the stressed segments, primarily in the service sectors like hospitality, tourism aviation and retail, as although 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 CII, said.
The ECLGS announced in May by the government as part of the ‘Aatmanirbhar Bharat’ package earmarked Rs 3 lakh crore collateral free automatic loans for businesses including micro, small and medium enterprises (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.
“It is likely that the scheme will utilize around Rs 2 lakh crore. The unutilized 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, which were earlier not eligible for the current ECLGS scheme,” CII said. This will help the sectors facing cash crunch and working capital issues, it added.
According to CII, 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. In the stressed sectors, not only has the contraction been severe, but the recovery is slower than that in manufacturing, the chamber noted.
As per industry estimates, travel and tourism, civil aviation and retail employ about 9.5 crore people, including direct and indirect employment. Prolonged stress in these employment intensive sectors can lead to a self-reinforcing downward spiral of job losses and demand contraction, endangering the overall economic recovery, said CII. (Source: PTI, Financial Express)
