Nearly half the loans under ECLGS went to services sector, traders

Together, the two sectors account for over Rs 91,000 crore worth of govt-guaranteed loans out of a total of Rs 1.98 trillion

Most loans guaranteed by the government under the first phase of its flagship Emergency Credit Line Guarantee Scheme (ECLGS) went to the services sector, with loans guaranteed worth Rs 45,853 crore. This was followed by traders who sought loan guarantees under the scheme worth Rs 45,505 crore, out of the total Rs 1.98 trillion worth guarantees under ECLGS 1.0 announced in May last year.

As the economy started showing signs of recovery and the government announced ECLGS 2.0 in Nov 2020, the real estate sector availed most loan guarantees of Rs 8,183 crore followed by textiles and construction sector that availed loan guarantees worth Rs 6,287 crore and Rs 4,059 crore, respectively. The scheme was extended for 26 stressed sectors identified by the Kamath Committee. Hotels, restaurants and the tourism sector had availed loan guarantees worth Rs 3,397 crore under the scheme as the economy started seeing people resuming travel post the strictest lockdown.

The scheme to provide credit support to small businesses--battered the most by the Covid-19 pandemic--has seen impressive disbursals which has led to several extensions and expansion for several sectors.

As the scheme was extended in March 2021 and dubbed ECLGS 3.0 to cover business enterprises in Hospitality, Travel and Tourism, sports sectors, such sectors availed loan guarantees worth Rs 4,045 crore, according to data shared by the Ministry of Finance in Parliament. The extension provided credit of up to 40 per cent of total credit outstanding as on Feb 29, 2020 with a tenor of 6 years including a two-year moratorium.

With a second devastating wave of the pandemic hitting the country, the government further expanded the scheme, calling it ECLGS 4.0, to provide loans up to Rs two crore for setting up oxygen plants capping the interest rate at 7.5 per cent. Only one loan has been guaranteed worth Rs 50 lakh as of now.

As per the data shared by the government, most loan guarantees, of Rs 39,977 crore were availed in Maharashtra followed by Tamil Nadu which saw loans worth Rs 26,383 crore being guaranteed. Gujarat and Karnataka saw loan guarantees worth Rs 23,073 crore and Rs 16,837 crore, respectively.

The government, in June, raised the overall cap for providing loan guarantees to Rs 4.5 trillion from Rs 3 trillion, and announced a separate loan guarantee scheme of Rs 1.1 trillion for health and other Covid-19 affected sectors.