ECLGS 2.0 'more than enough' to stabilise covid-hit firms: CRISIL

The Emergency Credit Line Guarantee Scheme (ECLGS 2.0) being extended by the Centre for eligible companies in 26 stressed sectors can potentially infuse Rs 40,000 crore of liquidity for rated firms, and should be more than enough to fund their cash-flow decline, according to CRISIL Ratings.

The KV Kamath committee to finalise financial parameters for restructuring of companies hit by the pandemic had identified 26 sectors.

The government, under its Atmanirbhar Bharat 3.0, included health care as eligible for financial assistance under the new ECLGS scheme. Now, companies with outstanding loans of between Rs 50 crore and Rs 500 crore are eligible for additional credit of up to 20 per cent of their outstanding debt as on February 29 this year. 

CRISIL’s study is based on 1,414 firms from 27 sectors. The outstanding debt of these firms combined would be Rs 2 trillion as of February 29. The scheme “can be a significant source of liquidity for sample-set given the average cash flow of these companies is seen contracting 17 per cent, or by Rs 11,000 crore, compared with the pre-pandemic assessment for this fiscal year”.