Gujarat has taken the third highest borrowing under the Emergency Credit Line Guarantee Scheme (ECLGS) after Tamil Nadu and Maharashtra – suggests the latest report of the state level bankers’ committee (SLBC).
Considering the greater financial requirements to meet working capital needs of micro, small and medium enterprises, Gujarat has borrowed Rs 20,862 crore under this scheme.
Industrial stakeholders and bankers say that Gujarat is also home to various MSMEs and a heavy manufacturing state. Moreover, the need for capital has increased after the pandemic began.
Gujarat had at least 12.18 lakhs MSMEs as of July 2021. Industry experts say that besides handling disruptions triggered by the lockdown, cost of exports and production shot up drastically which provided manufacturers with new working capitals. Gujarat’s borrowings account for 9.16% out of the Rs 2.27 lakh crore of the borrowings across the whole country.
What is ECLGS?
Due to the economic distress caused by the COVID-19 pandemic, the Finance Ministry unveiled a package of Rs 20 Lakh Crore called the Emergency Credit Line Guarantee Scheme (ECLGS). This package was specifically to address working capital needs and operational liabilities for micro, small, and medium enterprises.