Credit and financing for MSMEs: Extending the Emergency Credit Line Guarantee Program (ECLGS) and broadening its scope to cover hospitality, tourism and related sectors will certainly help MSMEs, although the overall impact Negligible, however, something is better than nothing, according to the umbrella organization for India’s travel and tourism industry: Federation of Indian Tourism and Hospitality Associations (FAITH). The government announced on Wednesday the launch of ECGLS 3.0 to cover companies in the hospitality, travel and tourism, leisure and sport sectors and extended the global emergency credit program by three months, including including the two previous versions, from March 31, 2021 to June 30. 2021, or until guarantees for the full amount of Rs 3 lakh crore are issued.
“It will definitely help and we are grateful to the government. However, we believe that something is better than nothing since 70 percent of businesses in the industry are small businesses. Domestic tourism recovered only 30-40%, while domestic travel revived 80% of pre-Covid levels. However, international tourism is absolutely at a standstill. I think the overall impact of ECLGS on MSMEs in the travel and tourism sector will be negligible, ”Subhash Goyal, secretary general of FAITH and chairman of the National Tourism and Tourism Council, told Financial Express Online. home of ASSOCHAM.
Goyal’s comment was in reaction to the amount still to be sanctioned on the ECLGS total body of Rs 3 lakh crore announced last year. As of February 28, 2021, member credit institutions (MLI), including public and private sector banks and non-bank financial corporations (NBFC) under the program, had already sanctioned 82% or Rs 2.46 lakh crore of Rs 3 lakh crore, MSME Minister Nitin Gadkari had said last month in a written response to a question from Rajya Sabha, citing data from the National Credit Guarantee Trustee Company (NCGTC) – the executing agency of the ECLGS program . Therefore, the hospitality, travel and tourism, as well as leisure and sports sectors would also be in contention with 27 sectors added as part of ECLGS 2.0 in November 2020 to the original program for the 18 % (Rs 54,000 crore) of Rs 3 lakh crore remains to be sanctioned.
“The funds available are not substantial. It arrived too late because there is hardly any money left, but we have to wait for detailed instructions. However, it makes at least a good deal for people to repay their loans after two years because they can barely make any money to repay now, ”Pradeep Shetty, co-secretary of the Financial Express, told Financial Express. Federation of Hotel and Restaurant Associations of India (FHRAI). In line.
Businesses with a total outstanding credit of not more than Rs 500 crore and in arrears, if any, for 60 days or less, as of February 29 will be eligible for the program, according to the finance ministry statement. ECLGS 3.0 will offer a credit extension of up to 40% of the total outstanding credit against 20% earlier in all credit institutions from February 29, 2020, while the loan term will be six years, including including a two-year moratorium. The mechanism’s disbursement deadline has also been extended to September 30, 2021.
“The government should reissue e-tourism visas and launch scheduled international flights for international tourism to pick up. Tourist and multilingual guides and small hotels are severely affected while large hotels are not severely affected, ”Goyal added. FAITH represents approximately 22,000 members across 10 associations, including FHRAI, Indian Association of Tour Operators, Hotel Association of India, Indian Convention Promotion Office and others.