Page 24 - Plastics News February 2022

FEATURE

is required to take the lead, she said. the country. NIP was launched with them with surety bonds, Sitharaman said.
Depending upon its implementation, 6,835 projects, which was later expanded The Insurance Regulatory and
Capex spending will provide a big boost to over 9,000 projects covering 34 sub- Development Authority has given a
to investment activity and support sectors. framework to replace the need for bank
economic growth in the next year. Capital expenditure by the Centre has guarantees with surety bonds, the finance
The Union Budget 2021-22 had provided been slower than the targeted pace minister said. With typically 20 per cent
a capital outlay of Rs 5.54 lakh crore. The outlined in the Budget. During April- of the funds getting locked up in bank
government had also made provision November, the first eight months of guarantees, this move could possibly
of over Rs 2 lakh crore for states and this fiscal, the government has incurred free up nearly Rs 8 lakh crore of private
autonomous bodies towards their capital 49.4 per cent or Rs 2.73 lakh crore of its sector funds over the entire spread of
expenditure. The National Infrastructure total budget target of capital expenditure. National Infrastructure Pipeline projects,
Pipeline was launched in 2020 with The government has also announced as per industry estimates.The targeted
projected infrastructure investment of to provide an alternative option to the focus on capital expenditure, with its
around Rs 111 lakh crore during FY guideline of seeking bank guarantees resulting multiplier effects, will be vital
2020-2025 to build infrastructure across for infrastructure projects and replacing in sustaining the economic growth.

Extension of ECLGS Will Help Medium, Small Firms

The Emergency Credit Line Guarantee Scheme (ECLGS) will be extended to cover the next fiscal as
well, with expanded guarantee cover of Rs 5 lakh crore. An additional guarantee amount of Rs 50,000
crore has been announced for the hospitality sector.

Why an extension to the ECLGS? (SMA-II) are not eligible.In November levels by as much as 8.5 percentage
Under ECLGS, which is for helping 2020, the government had launched a points. Output in most other sectors
companies tide over liquidity crunch new version of the ECLGS to provide have recovered above pre-pandemic
resulting from Covid-19 curbs, banks funding support to stressed sectors in levels with recovery in agriculture being
provide additional loans to existing the economy. Companies that had loan the strongest.
borrowers without asking for extra dues up to 30 days (Special Mention In order to support Covid-hit MSMEs
collateral. To encourage banks, these Accounts or SMA-0) as on February 29, further, the government last announced
loans are fully guaranteed by the 2020, were being provided additional an extension of its ECLGS till March 31,
government against credit losses. This credit of 20 per cent outstanding under 2022, or till guarantees for an amount of
scheme will be key to ensure that MSMEs the scheme, which will now be given to Rs 4.5 lakh crore are issued under the
impacted by intermittent lockdowns in SMA-1 accounts as well. scheme, whichever is earlier.
states get funding to stay afloat. Sanctions
and disbursements under the facility are Demand-led hike in limits
relatively faster since lenders have the This is within the Rs 3-lakh-crore loan
Central government guarantee in case of sanction limit set under the scheme,
default against these loans. Companies but it could be raised depending on the
from hospitality, travel and tourism as demand. The stressed sectors, including
well as leisure and sporting sectors are construction, trade, hotels, and transport,
expected to benefit from the relaxation in contributed nearly 83.4 per cent to the
the scheme. Hotels, restaurants, canteens, contraction in the services sector in the
caterers, marriage halls, tour operators, April-June quarter of FY21.
as well as amusement parks and theatres Trade, hotels, transport, communication
can avail the facility. Accounts that are and services related to broadcasting
classified as non-performing assets or have been particularly hit, where output
where overdues have crossed 60 days remains below pre-pandemic (2019-20)

24 PLASTICS NEWS FEBRUARY 2022