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As tensions between the US, Iran, and Israel escalate, India is preparing a financial safety net for businesses that could feel the ripple effects.
What’s going on: the government is considering a fresh version of its pandemic-era Emergency Credit Line Guarantee Scheme, which helped companies survive during COVID. Back then, the scheme offered quick access to loans, backed by government guarantees, keeping many businesses afloat when cash flows dried up.
Now, a similar plan may be rolled out to tackle the current crisis.
What’s the plan: the proposed scheme could cover loans worth around ₹2.5 lakh crore and run for four years. It’s also expected to offer a 90% government-backed guarantee through the National Credit Guarantee Trustee Company, meaning lenders would face minimal risk even if borrowers default.
In simple terms, if businesses struggle to repay, the government steps in to absorb most of the loss.
The catch: this support won’t come cheap. The government may need to set aside ₹17,000 crore to ₹18,000 crore to make it work.
Why it matters: this scheme was a big support during COVID, helping businesses survive tough times and manage their payments. With fresh global tensions building, the government seems ready to lean on the same idea again.
