NEW DELHI: The Emergency Credit Line Guarantee Scheme (ECLGS) helped save almost 13.5 lakh units and 1.5 crore jobs in the micro, small and medium enterprise (MSME) sector, a report by State Bank of India (SBI) economists showed on Thursday.
The scheme was launched by the Centre in May 2020 as an aid to the MSME sector in wake of the Covid-19 pandemic.
It was one of the biggest components of the Rs 20 lakh crore Atmanirbhar Bharat package announced by the government.
Timely financial infusions, as part of the scheme, has significantly helped in revitalising the MSME sector -- which is a key part of India's economic engine.
"We estimate almost 13.5 lakh micro, small and medium enterprises (MSMEs) accounts were saved due to ECLGS (including restructured). Almost 93.7 per cent of such accounts are in the micro and small category," SBI Research said in a report.
The report states that MSME loan accounts worth Rs 1.8 lakh crore were saved from slipping into non-performing assets (NPAs) during the period and this is equivalent to 14 per cent of the outstanding MSME credit being saved from becoming NPA.
If these units had turned NPAs, then at least 1.5 crore workers would have lost their jobs, the report added.
The ECLG scheme saved the livelihood of 6 crore families by providing timely financial aids to the MSME sector.
Amongst the states, Gujarat has been the biggest beneficiary, followed by Maharashtra, Tamil Nadu and Uttar Pradesh, it said.
Further, the report suggested revamping the existing Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) for boosting credit flow.
CGTMSE was launched 2 decades ago but remains a widely unpopular product even with a 55 per cent recovery rate, low portfolio delinquency and low capital requirement.
Its coverage for loans remains significantly low at sub-10 per cent.
According to the report, enhancing the scope and role of CGTMSE could support incremental SME lending by up to 2 per cent of GDP. This can in turn provide aids to additional 12 lakh SME units, supporting at least 1.2 crore more employment opportunities.
