The government on Wednesday approved an additional Rs 50,000 crore under the Emergency Credit Line Guarantee Scheme (ECLGS) to ensure low-cost credit flow to hospitality and related segments hit hard by the Covid-19 pandemic.

The enhancement is expected to provide much-needed relief to enterprises in these sectors by incentivising lending institutions to provide additional credit of up to Rs 50,000 crore at low cost, an official statement said.

The ECLGS was announced in May 2020 in wake of the outbreak of Covid-19 to help various sectors, especially in the MSME segment, to get credit at a concessional rate of 7 per cent. Loans of about Rs 3.67 lakh crore have been sanctioned under ECLGS till August 5, 2022.

Finance minister Nirmala Sitharaman had announced extending the validity of ECLGS till March 2023 and an increase in the limit of guaranteed cover by Rs 50,000 crore.

The cabinet also approved an interest subvention of 1.5 per cent on short-term agriculture loans of up to Rs 3 lakh for all financial institutions, a move aimed at ensuring adequate credit flow in the farm sector.

The 1.5 per cent interest subvention will be provided to lending institutions (public and private sector banks, small finance banks, regional rural banks, cooperative banks and computerised Primary Agriculture Credit Societies) for the financial year 2022-23 to 2024-25 for providing short-term agri loans of up to Rs 3 lakh to farmers.

This increase in interest subvention support requires additional budgetary provisions of Rs 34,856 crore for the period of 2022-23 to 2024-25.