India Inc. Lauds Finance Minister's Booster Shot To Economy

The chieftains of India Inc. lauded Finance Minister Nirmala Sitharaman's booster shot to the economy. 

Finance Minister Nirmala Sitharaman

Taking cognizance of the need to support the economy, which has been adversely affected by the second wave of the pandemic, the chieftains of India Inc. lauded Finance Minister Nirmala Sitharaman's booster shot to the economy. 

"We are heartened by the targeted interventions announced by the government, with a special focus on health and tourism. The liquidity boosting measures to keep the enterprises afloat in the aftermath of COVID 2.0 in the form of extending loan guarantees to the healthcare, tourism sectors & small borrowers, in addition to increasing the scope of ECLGS by Rs 1.5 lakh crore are very welcome steps," said Mr. TV Narendran, Global CEO and Managing Director Tata Steel.

Mr. Narandran, also President of the industry body Confederation of Indian Industry (CII), further said that the ECLGS Scheme had been a very successful intervention, with the sanctioned amount standing at Rs 2.69 lakh crores so far. The extension of its scope and coverage are expected to provide significant support to the cash flow of the stressed sectors.

Mr. Jyoti Prakash Gadia, Managing Director, Resurgent India, believes that the new economic relief measures announced today indicate that Finance Minister continues to rely upon the credit lead growth of the economy with expansion of the guarantee scheme. "Recognizing the realities relating to inadequacies in health Infra and other worst impacted sectors is a welcome step for creating the necessary facilities, particularly in non-affluent non-metro areas," said Mr. Gadia. 

"The government's backing by guaranteeing commercial banks for their lending to NBFC-MFIs to on-lend to small borrowers will help financial support to such small borrowers and also enhance NBFCs capacity to lend," said Lalit Kumar, Partner, J Sagar Associates.

Ms. Madhavi Arora, Lead Economist, Emkay Global Financial Services, while welcoming the measures, said that most of the financial support is still below the line and in the form of loan guarantees and not direct stimulus.

However, Vikash Khandelwal, CEO, Eqaro Guarantees, believes that guarantees are an efficient way to facilitate funding for businesses. It improves lender confidence and supports more accessible access to credit without locking in collaterals.

According to Mr. Shachindra Nath, Executive Chairman and Managing Director, U GRO Capital, considering the fact that almost 90% of the ECLGS outlay was effectively utilized to support the affected MSME sector, an additional Rs 1.5 lakh crore will significantly catalyze the revival as well as growth processes of the MSMEs. 

"This announcement came at a significant moment, as World MSME day was celebrated a day prior. Further, credit guarantee scheme for 25 Lakh individuals through the micro-finance institutions and the financial measures announced for the tourism sector are much appreciated," said Mr. Nath. 

Mr. Chandrajit Banerjee, Director General, CII, said, "Extending liquidity support to the stressed sectors emanating from the pandemic, the announcement of a slew of measures such as loan guarantees for healthcare, tourism sectors & small borrowers, in addition to increasing the scope of ECLGS by Rs 1.5 lakh crore are laudable. These measures are expected to address the severe cash flow distress precipitated by the business disruptions caused by the lockdowns in the wake of the second wave of the pandemic."

"The additional tranche of economic revival measures with Rs 6.29 lakh crores spend announced will impart a significant impetus to growth this year," said Mr. Banerjee.