Credit and finance for MSMEs: The recent credit support to domestic airlines under the Emergency Credit Line Guarantee Scheme (ECLGS) has not resulted in a reduction of MSMEs’ share in the scheme, Minister of State in the finance ministry Bhagwat Karad informed Parliament on Monday. According to the data shared by Karad in reply to a written question on ECLGS in the Lok Sabha, 76 loans involving Rs 1,464.61 crore were sanctioned as of November 30, 2022, of which Rs 648 crore loans were disbursed.

The loan amount disbursed till November to the aviation sector under ECLGS was 0.22 per cent of the Rs 2.85 lakh crore loans disbursed out of Rs 3.58 lakh crore loans sanctioned to 1.19 crore borrowers, according to the data cited by Karad from the National Credit Guarantee Trustee Company (NCGTC) which guarantees coverage to member lending institutions under ECLGS. 

For the uninitiated, to further support domestic airlines, the government in October this year had announced enhancing the credit limit to Rs 1,500 crore or 100 per cent of fund-based or non-fund-based loan outstanding of airlines, whichever is lower. Fund-based credit includes loans, overdrafts, etc., while non-fund-based credit refers to bank guarantees, letter of credit etc. Earlier the credit limit for airlines was up to Rs 400 crore. The government March this year also extended the ECLGS scheme by another year, till March 2023. 

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“While the (travel) agencies haven’t been able to benefit from it completely but on the other hand, airlines also deserve to be supported because they get inbound tourism in the country. So, if there is an excess of money available, the industry should be supported. However, the government should consult us and other aviation stakeholders for such measures because otherwise, MSMEs feel the money dedicated to them is being given to some other sector,” Jyoti Mayal, Vice Chairperson at tourism and hospitality body Federation of Associations in Indian Tourism & Hospitality (FAITH) had told FE Aspire. 

According to an industry update by the credit rating agency ICRA earlier this month, the pace of recovery for the Indian aviation industry earnings will be sluggish in FY23 while the industry is expected to incur a net loss of around Rs 15,000 crore – 17,000 crore owing to elevated costs. However, this will be notably lower compared to Rs 23,500 crore net loss in FY2022, primarily driven by the recovery in passenger traffic and lower interest burden, following the significant reduction in Air India’s debt before the divestment by the government.

Also read: ECLGS: 57% of Rs 5 lakh cr disbursed till Nov; NPAs at 3.89%