ECLGS 5.0 Scheme: In view of the continuously increasing financial pressure on Indian Airlines amid the West Asia crisis, the Central Government has taken a big step. Emergency Credit Line Guarantee Scheme i.e. ECLGS 5.0 has been approved in the cabinet meeting chaired by Prime Minister Narendra Modi. Under this scheme, a separate provision of Rs 5,000 crore has been made for the airline sector.

Under this scheme, the government has given the facility to airlines to provide additional loan up to 100 percent of their peak working capital, although this amount will be limited to a maximum of Rs 1,500 crore per airline.

Easy loan and relief terms

The government will give a credit guarantee of up to 90 percent on this loan and the guarantee fee has also been kept zero, that is, the airlines will not have to pay any separate charge for it. For airlines who want to take advantage of this scheme, it is necessary that their credit facility should be operational by March 31, 2026 and the accounts should not be NPA. Talking about the loan period, the airline sector will get a loan for 7 years in which there will be no moratorium or installment payment for the first 2 years. This scheme will remain in force till 31 March 2027.

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Government’s support amid rising costs

The government says that due to the ongoing conflict in West Asia, the prices of ATF i.e. aircraft fuel have increased rapidly, which has put huge pressure on the operating costs of airlines. In such a situation, this scheme will help the airlines to overcome the shortage of working capital and continue their operations without interruption. This will also help in saving employment and keeping the supply chain healthy.

It is noteworthy that in recent months, due to the rising cost of fuel, airlines like IndiGo and Air India have imposed fuel surcharge and have also reduced flights on some international routes. In this background, this initiative of the government is being considered as a big relief for the airline industry.

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