Centre raises credit limit under ECLGS for airlines to 100% of debt up to ₹1,500 cr.

Source: The post is based on the article “Centre raises credit limit under ECLGS for airlines to 100% of debt up to ₹1,500 cr.” published in The Hindu on 6^th October 2022.

What is the News?

The Ministry of Finance has raised the credit limit for airlines under the Emergency Credit Line Guarantee Scheme (ECLGS). This is the second time the government has liberalised the scheme for the aviation sector.

What is the need for the liberalisation of ECLGS?

Given the volatility in foreign exchange rates, high fuel prices and the recessionary fears in some of the key economies of the world, the aviation sector continues to remain under extreme pressure. So, the government has liberalised the ECLGS.

What is an “Emergency Credit Line Guarantee Scheme”?

The scheme introduced for medium and small enterprises during the outbreak of the COVID-19 pandemic was extended till March 2023 and its guarantee cover expanded by ₹50,000 crores to ₹5 lakh crore.

What are the major changes in the ECLGS?

Earlier, airlines were eligible to borrow up to 50% of their credit outstanding up to ₹400 crores. But from now on they are eligible for a sum equivalent to 100% of their outstanding debt, up to a maximum of ₹1,500 crores.