Government Announces Rs 2 Lakh Crore Credit Scheme to Support Sectors Affected by Iran Conflict

India Prepares Support Package for Sectors Impacted by Iran Conflict

The Finance Ministry is working on a support package worth over Rs 2 lakh crore to help sectors affected by the ongoing Iran conflict. According to a report by NDTV Profit, citing government sources, the proposed scheme is being modelled on the Covid-era Emergency Credit Line Guarantee Scheme (ECLGS) and is currently being finalised by the Department of Financial Services.

The report states that the scheme is expected to offer collateral-free loans backed by government guarantees, particularly targeting Micro, Small and Medium Enterprises (MSMEs), to ensure easier access to funds and prevent liquidity stress. MSMEs, which are highly sensitive to interest rates and depend on steady cash flows, are likely to be the key beneficiaries of the scheme.

Timeline for Scheme Rollout

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The proposed scheme is expected to be rolled out within the next 15 days. Officials told NDTV Profit that while there is no immediate systemic stress, the government is preparing a precautionary cushion to ensure liquidity support if conditions worsen further.

Comparison of ECLGS and Proposed Scheme

The earlier ECLGS had supported millions of borrowers and helped stabilise MSMEs during the pandemic, and according to NDTV Profit, the new scheme is expected to follow a similar framework to navigate the current economic challenges. The report also states that even if geopolitical tensions ease, recovery in affected sectors may take time due to continued supply disruptions and demand uncertainty.

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