New Delhi: The government will not allow the volatile external situation to affect Indian businesses, Finance Minister Nirmala Sitharaman said on Thursday, highlighting the measures taken to secure unsecured credit.
Speaking at a book fair and industrial exhibition in Daman, the minister said that a ministerial committee was reviewing the availability of cooking gas on a daily basis to ensure uninterrupted supply.
Sitharaman said that due to US tariffs on Indian exports and the war in West Asia, Indian businesses, especially small businesses, were facing problems. Sitharaman referred to the steps taken by the government, including unsecured Mudra loans to small businesses and the emergency credit line guarantee scheme, which was introduced during the covid period and the latest version of which was approved by the Union Cabinet on 5
As part of this, working capital is provided without collateral, on a government guarantee. “The prime minister will not allow any negative impact on your business because of the external situation,” Sitharaman said.
The ECLGS 5.0 approved by the Cabinet this week offers additional credit support to eligible businesses in view of the situation in West Asia.
It seeks to facilitate further credit flow ₹2.55 trillion inclusive ₹5000 crore for airlines. Under this scheme, credit guarantee coverage of 100% for Micro, Small and Medium Enterprises (MSMEs) and 90% for non-MSMEs and also for the aviation industry is offered to lenders. It helps businesses cope with any short-term liquidity mismatch in view of the crisis in West Asia.
Loans without collateral
Sitharaman emphasized that unsecured loans provided during the pandemic have helped Indian businesses recover faster than anywhere else, helping the country maintain its status as the world’s fastest-growing major economy.
There is now a war on two fronts – between Ukraine and Russia and between Israel, the US and Iran, which is driving up fertilizer prices and disrupting the flow of refined fuel, Sitharaman said. The minister also said that the ministerial committee is reviewing the LPG supply situation on a daily basis.
Credit support has been a key element of India’s strategy to deal with shocks like covid and the war in West Asia. Credit guarantees provided by the government encourage banks to lend without hesitation, and default rates have been low.
Sitharaman urged businesses to intensify operations in Daman and increase exports from the region, which will contribute to India’s foreign exchange earnings.
