Credit and Finance for MSMEs: Extending the Emergency Credit Line Guarantee Scheme (ECLGS) additional and widening its scope to cover hospitality, tourism, and associated sectors will surely assistance MSMEs even though the general effect would be negligible, having said that, anything is much better than nothing at all, according to the apex body for travel and tourism sector in India: Federation of Associations in Indian Tourism & Hospitality (FAITH). The government on Wednesday had announced the launch of ECLGS 3. to cover enterprises in hospitality, travel & tourism, leisure & sporting sectors and extended the general emergency credit scheme like the prior two versions by 3 months from March 31, 2021, till June 30, 2021, or till guarantees for the complete Rs 3 lakh crore quantity are issued.
“It is definitely going to help and we are thankful to the government. However, we think something is better than nothing as 70 per cent enterprises in the sector are small businesses. Domestic tourism has recovered only 30-40 per cent while domestic travel has revived 80 per cent of the pre-Covid levels. However, international tourism is absolutely on standstill. I think the overall impact of ECLGS on MSMEs in the travel and tourism sector will be negligible,” Subhash Goyal, Secretary-General, FAITH and Chairman, ASSOCHAM National Tourism & Hospitality Council told TheSpuzz Online.
Goyal’s comment was in reaction to the quantity left to be sanctioned out of ECLGS’s total corpus of Rs 3 lakh crore announced final year. As of February 28, 2021, member lending institutions (MLIs) like public and private sector banks and non-banking monetary providers (NBFCs) below the scheme had currently sanctioned 82 per cent or Rs 2.46 lakh crore of Rs 3 lakh crore, MSME Minister Nitin Gadkari had mentioned in a written reply to a query in the Rajya Sabha final month citing information from the National Credit Guarantee Trustee Company (NCGTC) – the implementing agency of the ECLGS scheme. Hence, hospitality, travel & tourism, and leisure & sporting sectors would also now be vying along with 27 sectors added below ECLGS 2. scope in November 2020 to the original scheme for the 18 per cent (Rs 54,000 crore) of the Rs 3 lakh crore left to be sanctioned.
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“The funds available are not substantial. It has come too late as there is hardly any money left but one should wait for detailed guidelines. However, it makes for a good deal at least for people to repay loans after two years as they can make barely any money to repay currently,” Pradeep Shetty, Joint Secretary, Federation of Hotel & Restaurant Associations of India (FHRAI) told TheSpuzz Online.
Businesses with total credit outstanding not exceeding Rs 500 crore and overdue, if any, for 60 days or significantly less, as of February 29 will be eligible for the scheme, according to the Finance Ministry’s statement. ECLGS 3. will give a credit extension of up to 40 per cent of total credit outstanding vis-à-vis 20 per cent earlier across all lending institutions as of February 29, 2020, whilst loan tenor will be six years like a moratorium of two years. The final date of disbursement below the scheme has also been extended to September 30, 2021.
“The government should reissue e-tourist visas and start scheduled international flights for international tourism to revive. Tourist and language speaking guides and small hotels are being impacted severely while large hotels are not highly impacted,” added Goyal. FAITH represents about 22,000 members via 10 associations like FHRAI, Indian Association of Tour Operators, Hotel Association of India, India Convention Promotion Bureau, and other individuals.