Centre's Covid-Era Response Strategy To Shield Sectors Hit By War: Sources

The Union Ministry of Finance is working on pre-emptive steps to support sectors that could face stress due to the ongoing Iran war, sources told NDTV Profit.

A new credit scheme of over Rs 2 lakh crore is in the works. It is being designed on the lines of the Covid-era Emergency Credit Line Guarantee Scheme (ECLGS), added sources.

The move is aimed at providing a cushion to stress that may emerge in export-linked sectors. MSMEs are seen as the most exposed. They are highly sensitive to interest rates and demand disruptions.

Ministry's Department of Financial Services is working on the contours of the scheme. It could be rolled out within 15 days, sources said. The scheme may offer collateral-free loans backed by government guarantees, especially for MSMEs.

Officials said there is no immediate stress in the system. But the government is preparing a safety net in advance. Even if the war ends soon, affected sectors could take time to recover, an official told NDTV Profit.

Credit Scheme: Major Proposals 

• Over Rs 2 lakh crore credit cushion under consideration
• Modelled on the Covid-era ECLGS framework
• Focus on export-linked and vulnerable sectors
• MSMEs likely to be key beneficiaries
• Collateral-free loans with government guarantee may be offered
• Rollout possible within 15 days
• No immediate stress, but pre-emptive preparation underway

Indian Economy Shows Resilience

The report comes a day after the Centre released Goods and Services Tax (GST) collection figures for March. As per official data, GST collections grew 8.8 per cent year-on-year in March, while domestic passenger vehicle sales recorded a strong 16.3 per cent increase. Power consumption rose 1.8 per cent to 149.56 billion units during the month and railway freight loading climbed 3.4 per cent to 166.2 million tonnes.

The data are particularly significant as it shows India's economy has stayed resilient despite disruptions stemming from the Iran war.