Budget 2022: The Extension of ECLGS Scheme Is A Welcome Move For MSMEs

The finance minister stated in her budget statement today that the ECLGS will be extended till March 2023, with assured cover increased by Rs 50,000 crore. She further claimed that the scheme now has complete coverage of Rs 5 lakh crore. An additional amount has been set aside for the hospitality industry. This expansion of the ECLG would benefit lending to the MSME sector.

Owing to the extension Chandan Garg, Chairman & MD, Innovana Group has said "The extension of ECLGS scheme is a welcome move for MSMEs. The credit and fiscal support of 5 lakh crores will give a huge boost to this sector encouraging new businesses to come to the fore. This announcement will certainly generate more than 10 lac of employment opportunities in a short span of time. However, a slight focus on easing the trade and the taxation policies for MSMEs facilitating more freedom to do business was also expected from this year's budget announcement,"

The ECLGS scheme was launched as part of the Aatmanirbhar Bharat Abhiyan with a COVID-19 assistance package of Rs 20 lakh crore earlier. Interest rates are restricted at 9.25 percent for banks and 14 percent for NBFCs under the ECLGS scheme. The scheme allows for a maximum tenure of 4 years from the date of disbursement and a 12-month moratorium period on the principal amount. In light of the economic misery caused by the COVID-19 epidemic, the extension of the comprehensive package offered by the Finance Ministry would help the Micro, Small and Medium Enterprises (MSMEs) sector even more.