Indian businesses may get relief within two weeks as the government is planning to provide credit guarantee support to the industry amid cost pressures due to the West Asian war.
The scheme will be similar to the credit guarantee support given by the Centre during the Covid-19 pandemic, according to a report by The Economic Times.
The new credit guarantee scheme will aim to ease funding access for companies that are currently facing higher costs of input materials and logistics, as the government wants to limit the impact of the United States-Israel-Iran war on the domestic economy, according to the report.
The government could provide an overall credit guarantee of up to Rs 2 lakh crore to Rs 2.5 lakh crore. It is expected that the announcement of the scheme may happen within two weeks.
“This is being worked out. The idea is to reassure the industry in view of the uncertainties imposed by the war,” the report quoted a government official as saying.
The official also clarified that there was no immediate concern about the situation, but the scheme was meant to be a proactive step by the government.
The government has also reached out to industry stakeholders to flag real-time issues arising due to the war.
During the Covid-19 pandemic, the government had announced the Emergency Credit Line Guarantee Scheme (ECLGS). As industries across sectors were struggling to start production during that time because of a liquidity crunch after a months-long lockdown, the government had given credit support of about Rs 3.62 lakh crore.
Most of the loans (about 80 percent) were disbursed at an interest rate of 8 percent or less. Micro, small and medium enterprises (MSMEs) were the most benefited because of the ECLGS. Over 92 percent of the loans disbursed were given to small businesses. A total of 11.9 million beneficiaries were covered under the scheme during that time.
