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Finance Minister Nirmala Sitharaman. (ANI)
Finance Minister Nirmala Sitharaman. (ANI)

Stimulus package 3.0: Govt extends emergency credit line guarantee scheme till March 2021

  • Original ECLGS had one year of moratorium and 4 years of repayment, the new scheme will have 1-year moratorium and 5 years of repayment
  • Companies with dues of 50-500 crore as on February 29 are eligible, the finance minister added

Finance Minister Nirmala Sitharaman on Thursday announced that the Emergency Credit Line Guarantee Scheme (ECLGS) has been extended till March 31, 2021.

Entities up to 30 days past due (dpd) (SMA0) will get additional credit for 5 years, Sitharaman said in a press conference today while announcing new stimulus measures as part of the ‘Atmanirbhar Bharat 3.0’ package.

Tenor of this additional credit under ‘ECLGS 2.0’ will be five years, including one year moratorium. Companies with dues of 50-500 crore as on February 29 are eligible, the finance minister added.

The scheme encompasses guaranteed credit support for 26 stressed sectors identified by the Kamath Committee. Original ECLGS had one year of moratorium and 4 years of repayment, the new scheme will have 1-year moratorium and 5 years of repayment.

The scheme was earlier extended till November 30 as the government had failed to meet the target of 3 lakh crore, it said earlier.

The ECLGS was launched as part of the Aatmanirbhar Bharat Abhiyan package announced by Finance Minister Nirmala Sitharaman in May to mitigate the distress caused by coronavirus-induced lockdown, by providing credit to different sectors, especially micro, small and medium enterprises (MSMEs).

Under the scheme, fully guaranteed and collateral-free additional credit to MSMEs, business enterprises, individual loans for business purposes, and MUDRA borrowers is provided to the extent of 20 per cent of their credit outstanding as on February 29, 2020.

The finance minister also announced a new job creation scheme by giving subsidy to those establishments that make new hires.

The subsidy would be to cover for retirement fund contributions by employees as well as employers for two years, she said.

Employees contribution (12 per cent of wages) and employer's contribution (12 per cent of wages) totalling 24 per cent of wages would be given to establishments for two years, she said.

Under the Aatmanirbhar Bharat Rozgar Yojana, every Employees' Provident Fund Organisation (EPFO)-registered establishment taking new employees would get this subsidy.

The scheme will cover any new employee joining employment in EPFO-registered establishment on monthly wages less than 15,000 crore.

It would also cover EPF members drawing monthly wages of less than 15,000, who made an exit from employment during COVID-19 pandemic from March 1, 2020 and is employed on or after October 1, 2020.

The scheme would cover establishments registered with EPFO if they add new employees compared to the reference base of employees as in September 2020.

The condition would be adding a minimum of two new employees for establishments with up to 50 employees. Those establishments with more than 50 employees, would have to give a minimum of five new jobs.

The scheme would be operational till June 30, 2021.

On 11 November, the government approved a Production-Linked Incentive (PLI) scheme for ten key sectors, including telecom, automobiles and pharmaceuticals, taking the total outlay for such incentives to nearly 2 lakh crore over a five-year period.

The scheme will help encourage domestic manufacturing, reduce imports and generate employment as the government works to bolster economic growth. The financial outlay for the new scheme will be 1,45,980 crore.


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