Loan Guarantee Scheme for Covid Affected Sectors (LGSCAS)

Context:

On account of the disruptions caused by the second wave of COVID 19 specially on healthcare sector, the Union Cabinet, chaired by the Prime Minister has approved Loan Guarantee Scheme for Covid Affected Sectors (LGSCAS)

• The Scheme enabling funding to the tune of Rs. 50,000 crore to provide financial guarantee cover for brownfield expansion and greenfield projects related to health/ medical infrastructure.

Background:

Government has taken various measures to combat the crisis caused due to Covid-19 pandemic which has been upended by the second wave of COVID-19. This wave has placed enormous stress on health facilities as well as livelihoods and business enterprises in many sectors. This wave has sharply brought out the need to enhance public and private investments in the health sector. This is necessary across the country, from metro cities to tier V and VI towns as well as rural areas. The requirements include additional hospital beds, ICUs, diagnostic centres, oxygen facilities, telephone or internet based medical advice and supervision, testing facilities and supplies, cold chain facilities for vaccines, modem warehousing for medicines and vaccines, isolation facilities for triage, ramping up of production of ancillary supplies such as syringes and vials etc.

Aim:

• Upscaling the medical infrastructure in the country
• Targeting underserved areas.
• It would provide a guarantee of 50 percent for brownfield projects and 75 per cent to greenfield projects for loans sanctioned up to Rs.100 crore, set up at urban or rural locations other than 8 Metropolitan Tier 1 cities (Class X cities).
  
  
• For aspirational districts, the guarantee cover for both brownfield expansion and greenfield projects shall be 75%.

Fund Allocation: Rs. 50,000 crore

Objective

• LGSCAS is to partially mitigate credit risk (primarily construction risk)
• Facilitate bank credit at lower rates of interest,” the government said in a statement.

Targets:

The Scheme would be applicable to all eligible loans sanctioned up to 31.03.2022, or till an amount of Rs. 50,000 crore is sanctioned, whichever is earlier.

Impact:

The LGSCAS has been formulated as a specific response to an exceptional situation the country has witnessed due to lack of adequate health infrastructure in the light of second wave of Covid-19. The approved scheme is expected to help the country in shoring up its much-needed healthcare infrastructure along with creating more employment opportunities.

Emergency Credit Line Guarantee Scheme (ECLGS)

Source: PIB