Economic Survey 2023: ECLGS borrowers had lower NPA rates

The Economic Survey unveiled on January 31 showed that the mostly micro, small, and medium enterprises that availed of an emergency credit scheme repaid a large part of what they owed. The government announced the Emergency Credit Line Guarantee Scheme (ECLGS) in FY21, which according to the survey succeeded in shielding MSMEs from financial distress.

A report from credit information company CIBIL showed that the scheme supported MSMEs facing the COVID shock, with 83 percent of borrowers being micro-enterprises. Among the micro units, half had an overall exposure of less than Rs10 lakh.

CIBIL data also showed that ECLGS borrowers had lower non-performing asset (NPA) rates than enterprises that were eligible for ECLGS but did not avail of it.

Moreover, the goods and services tax paid by MSMEs, after declining in FY21, showed an uptick, reflecting the financial resilience of small businesses.

ECLGS was launched with a corpus of Rs 4.5 lakh crore that was subsequently enhanced to Rs 5 lakh crore, with a special focus on enterprises in hospitality and related sectors.