Finance minister Nirmala Sitharaman on Friday met representatives from the aviation, tourism and hospitality industries and chiefs of state-run banks to address issues faced by them and ensure adequate and easy credit flow. These sectors have been battered by the pandemic, but are now returning towards normalcy.
The meeting comes days before regular international flights are likely to resume operations from March 15, having remained suspended for about two years. Most curbs imposed by states on travel, tourism and hospitality industries have been lifted, setting the stage for more economic activity. The need for credit, therefore, is expected to go up in the coming months.
While the aviation sector is ready for take-off, it faces growing risks from elevated oil prices. This has led to a clamour for some succour from the government, apart from cheaper credit. Aviation minister Jyotiraditya Scindia attended one of the meetings.
On a year-on-year basis, non-food bank credit registered a growth rate of 9.3% in December 2021, against 6.6% the year before. Growth in credit to industry improved sharply to 7.6%, but still trailed the rise in overall non-food loans.
Moreover, the Budget for FY23 has proposed an additional Rs 50,000 crore window under the Emergency Credit Line Guarantee Scheme (ECLGS) to support hospitality and related services sector. It also proposed to extend the ECLGS by one more year through March 2023 and expand the guarantee cover to 5 lakh crore from4.5 lakh crore.
The guaranteed loan scheme was announced by the government in the wake of the Covid-19 outbreak in 2020 to soften the blow to mainly small and medium businesses. The scope of the scheme was later expanded substantially to include even larger firms. The finance ministry is learnt to have sought the feedback of industry representatives on this scheme.
Friday’s meeting was also attended by minister of state for finance Bhagwat Karad, top bureaucrats of the finance ministry and representatives of the India Banks’ Association.