In May 2020, the Centre had launched the Emergency Credit Line Guarantee Scheme (ECLGS) to support firms, especially MSMEs, in dealing with the fallouts of the Covid pandemic. The facility had benefitted 1.19 crore borrowers, with guarantees adding up to Rs 3.61 lakh crore being issued. With the West Asia conflict now disrupting economic activities once again, though the current disruptions are of a lower order of magnitude, the government has launched a similar credit guarantee scheme — ECLGS 5.0. This is a welcome measure, which could help firms bridge short-term liquidity mismatches.

The scheme........

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