Crisil: Hotels, aircraft, and travel businesses will benefit from the revised ECLGS

Businesses impacted worst by COVID-19’s second wave, including as hotels, civil aviation, and tour operators, will benefit from the extended Emergency Credit Line Guarantee Scheme ( ECLGS ), reported Crisil.

According to a study by major credit ratings agency Crisil, it would also promote the development of healthcare facilities, particularly oxygen availability, in tier-2 and beyond cities and the hinterland.

The plan was initially unveiled in May of last year, when the pandemic’s economic effects was becoming clear. The most recent iteration of the plan is effective till September 30, 2021, or until the Rs 3 lakh crore budget is exhausted. More industries have been added to the scheme’s scope, some eligibility criteria have been relaxed, and micro, small, and medium enterprises (MSMEs) have been allowed to take out borrowings for longer terms, according to the statement, which noted that the scheme had sanctioned loans worth Rs 2.54 lakh crore as of May.

According to the agency, the updated programme now includes the civil aviation industry, as well as easing the qualifying conditions for enterprises in the hospitality, travel and tourism, and leisure and sports sectors, which are expected to have a 30% sequential demand decline in the June quarter.

The revised schemes, which include funding of up to Rs 2 crore for oxygen generating plants for capacity enhancement at 7.5 percent interest, will benefit small hospitals, particularly in tier-2 and even beyond urban centers, as well as the hinterland, which have a limited credit profile, according to Crisil.

While the scheme’s parameters are appealing, healthcare organisations will need to carefully examine expenditure, bearing in mind the demand’s long-term viability and overall profitability of expenditures, according to the agency.

MSME borrowers who took advantage of the ECLGS 1.0 programme would also benefit from the new plan, if they are qualified under the Reserve Bank of India’s restructuring 2.0 framework.

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