The government is not much keen on extending Rs 3 lakh crore-Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector ahead of October. However, the sanctioned amount so far is about 65 per cent of the target. The scheme is meant to provide financial support to businesses, primarily Micro, Small and Medium Enterprises (MSMEs), impacted by the slowdown triggered by the coronavirus pandemic.
The objective is to provide and lend support to all those affected and if there are no takers for the scheme, there is no need to extend the scheme. Though many believe there is some room left. On August 1, the government widened the scope of the Rs 3 lakh crore-scheme by doubling the upper ceiling of loans outstanding and including certain loans given to professionals like doctors, lawyers and chartered accountants for business purposes under its ambit.
To ensure more companies can benefit from the scheme, it was decided to increase the upper ceiling of loans outstanding as of February 29 for being eligible under the scheme from Rs 25 crore to Rs 50 crore. The maximum amount of Guaranteed Emergency Credit Line (GECL) funding under the scheme was correspondingly increased from Rs 5 crore to Rs 10 crore.
The announced scheme was part of the government's Rs 20.97 lakh crore-economic package in the wake of the coronavirus pandemic. The scheme was later tweaked to be made applicable for companies with an annual turnover of Rs 250 crore as against the earlier threshold of Rs 100 crore. Banks and Non-banking Financial Companies (NBFCs) have approved loans worth about Rs 1,87,579 lakh crore while disbursement stood at Rs 1,36,140 crore as of October 5.
A few months back, on May 20, the Cabinet approved additional funding of up to Rs 3 lakh crore at a concessional rate of 9.25 per cent through ECLGS for the MSME sector. Under this scheme, 100 per cent guarantee coverage will be provided by the National Credit Guarantee Trustee Company (NCGTC) for additional funding of up to Rs 3 lakh crore to eligible MSMEs and interested Micro Units Development and Refinance Agency (MUDRA) borrowers in the form of a GECL facility.
The scheme will be applicable to all loans sanctioned under the GECL facility during the period from the date of announcement of the scheme to October 31 or till the amount of Rs 3 lakh crore is sanctioned under GECL, whichever is earlier.
Meanwhile, the industry is quite keen on the upcoming scheme of Remission of Duties or Taxes on Export Products (RoDTEP) which will revolutionise the way industries operate in India. The government is looking ahead to PLI and RoDTEP as a viable option rather than having dedicated schemes for each sector.
In September, the government announced that the Merchandise Exports from India Scheme (MEIS) benefit will be capped upto Rs 2 Cr per Importer Exporter Code (IEC) from 1st Sep to 31 Dec 2020. The government believed that this will remove uncertainty and protect genuine exporters, ensuring Make in India-Make for the World. It also stated that the MEIS will cease to be functional post December 31, 2020, making way for RoDTEP.
The Comptroller and Auditor General of India (CAG) observes, substantial delays in issue of MEIS and Services Export from India Scheme (SEIS) scrips indicated the failure of the automated systems in achieving the objective of simplification of procedures and ease of doing business. On SEIS, CAG stated, self-declarations and CA certificates were insufficient to provide assurance about the eligibility of services and remittances for grant of rewards under the scheme.
However, the Department of Commerce relied heavily on these self-declarations and CA certificates for granting rewards. RAs (regional authorities) failed to distinguish between eligible and ineligible services and to segregate and deny rewards to ineligible services, rues CAG.
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