The government may soon bring a Rs 2.5 lakh crore credit guarantee scheme to tackle large-scale disruption and challenges arising out of the West Asia war, according to a report by Moneycontrol, with a note
being prepared by the finance ministry and to be taken up by the Cabinet soon.
The proposal reportedly covers sectors such as aviation, micro, small and medium enterprises (MSMEs) and other businesses affected by the West Asia crisis. The final rollout will depend on Cabinet approval, noted the MC report.
The proposed scheme is likely to be structured as an expanded version of the Emergency Credit Line Guarantee Scheme (ECLGS), which was introduced in 2020 to support MSMEs during the Covid-19 crisis, as reported by Moneycontrol (MC). The move aims to provide a broad credit guarantee framework to ease liquidity stress across sectors impacted by the ongoing West Asia crisis.
The Finance Ministry’s Expenditure Finance Committee (EFC) has cleared the proposed scheme aimed at supporting MSMEs, airlines and other businesses hit by liquidity stress due to the West Asia conflict.
With this approval, the scheme’s design, costs and overall fiscal impact have been internally assessed, marking an important step before it is sent to the Cabinet for final approval.
The EFC typically reviews major government spending proposals, examining their structure and financial implications before recommending them for Cabinet consideration.
The government is planning to deploy Rs 2.5 lakh crore to ease financial stress caused by supply disruptions, rising input costs and ongoing geopolitical uncertainty. The objective is to prevent this pressure from turning into defaults and to maintain steady credit flow to vulnerable sectors.
The proposed scheme comes at a time of heightened global uncertainty triggered by the West Asia crisis, which has disrupted commodity prices, trade flows and overall financial conditions.
