New Delhi, Apr 4 (KNN) The Government of India is working on a Rs 2–2.5 lakh crore credit guarantee scheme to support businesses facing stress due to the ongoing geopolitical tensions in West Asia, according to sources.
The proposed scheme aims to ensure liquidity, stabilise industries, and cushion the economic impact of rising oil prices, supply chain disruptions, and global uncertainty, reported The Economic Times.
Modelled on Pandemic-Era Scheme
The new initiative is likely to be structured on the lines of the Emergency Credit Line Guarantee Scheme (ECLGS) introduced during the COVID-19 pandemic.
It may offer 100 percent government-backed, collateral-free loans. Target beneficiaries are expected to include MSMEs and other affected sectors. The objective is to help firms manage short-term cash flow disruptions
Response to Rising Economic Stress
The move comes as industries face mounting pressure from higher input and logistics costs, disruptions in global trade routes and volatility in crude oil prices.
The government has already initiated consultations with industry stakeholders to assess real-time disruptions in production and supply chains.
Part of Broader Economic Strategy
This scheme is part of a wider policy response to the West Asia conflict, which has prompted the Centre to consider multiple relief and reform measures to safeguard economic stability.
Recent steps include export support schemes (RELIEF initiative), extension of export credit timelines by the Reserve Bank of India and measures to stabilise supply chains and manage inflation.
Focus on MSMEs and Credit Flow
The scheme is expected to play a critical role in supporting MSMEs facing liquidity stress, preventing a spike in loan defaults and NPAs and maintaining credit flow in the banking system.
Credit guarantee mechanisms typically reduce lender risk, encouraging banks to extend loans even during uncertain economic conditions.
While details of the scheme are yet to be finalised, an official announcement is expected soon. The initiative is likely to strengthen financial resilience across sectors, especially if geopolitical tensions persist and economic pressures intensify.
(KNN Bureau)
