FM Nirmala Sitharaman: Government may tweak 3Lakh-crore credit guarantee scheme

New Delhi: Finance Minister Nirmala Sitharaman on Tuesday said the government is open to further tweaking the Rs 3 lakh crore credit guarantee scheme for providing collateral-free loans to small businesses.

According to industry association CII, with which the minister had a closed-door meeting, she also said that domestic revenue generation is a concern as sectors like tourism, real estate, hospitality, and airlines have been affected "disproportionately" by the Covid-19 pandemic.

In a meeting with the members of CII, Sitharaman said structural reform is a key priority for the government and it will move fast on the Cabinet-cleared disinvestment proposals, including that of banks.

"The (Rs) 3 Lakh Crore scheme is open for professionals now and Government is open to more tweaking, changes if required," CII tweeted Sitharaman as saying.

Earlier this month, the government had widened the scope of the Rs 3-lakh crore credit guarantee scheme by doubling the upper ceiling of loans outstanding to Rs 50 crore and including certain individual loans given to professionals like doctors, lawyers and chartered accountants for business purposes under its ambit, apart from MSMEs.

Till August 20, banks have disbursed more than Rs 1 lakh crore loans under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS), which was announced as part of the Aatmanirbhar Bharat package.

The minister further said that every announcement has had a structural reform component with it, and the government is reaching out to industry to understand their concerns.

"Structural reforms are key priority for the government, reflected in government announcements to address Covid-19 challenges," Sitharaman said.

On the private investment cycle, she said that in September 2019, the government had reduced corporate tax rate but investments could not happen due to Covid-19.

With post-Covid reset happening, data-driven manufacturing models and newer investments can happen in FinTech, she said.

"Some sectors such as tourism, real estate, hospitality, airlines have been affected disproportionately. Domestic revenue generation is a concern," Sitharaman said, adding the government is working with the Reserve Bank of India to ensure adequate support to banks

On the issue of local manufacturing, Sitharaman said that Productivity Linked Incentives (PLIs) scheme has met with excellent response and has helped speed up manufacturing of critical bulk drugs and APIs in six states.

On delayed payments by the government agencies, she said that the Finance Ministry is taking periodic reviews to expedite payments due to the industry.

Responding to a question about the need for lowering GST rates on 2-wheelers, she assured that this was indeed a good suggestion as this category is neither a luxury nor a sin good and hence merits a rate revision. Consequently, this will be taken up with the GST Council, she added.