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Covid-hit India expands guarantee on loans to health, tourism sectors

Government will expand federal guarantees on loans to businesses to $60.7 billion from an earlier limit of $40.37 billion, says Finance Minister Nirmala Sitharaman.

AFP

A pedestrian walks past a wall mural representing awareness measures against Covid-19 in Navi Mumbai on June 7, 2021.

India has extended a federal guarantee on bank loans to health and tourism services while waiving visa fees for 500,000 foreign tourists, the Finance Minister has said, stepping up support for the pandemic-hit economy.

The government will expand federal guarantees on loans to businesses to $60.7 billion from an earlier limit of $40.37 billion, Finance Minister Nirmala Sitharaman told reporters on Monday.

The government will provide a guarantee of $14.8 billion on loans to the health sector and medical infrastructure, she said, that will enable them to raise loans at a lower interest rate of 8-8.25% a year.

The Emergency Credit Line Guarantee Scheme, launched last year, has helped cash-starved small businesses raise funds during the Covid-19 lockdown for working capital and to meet their orders.

The government will extend benefits from the free food grain programme for poor people, launched last year, till November that will cost $12.63 billion, bringing the total cost of the programme to more than $30.55 billion, she said.

READ MORE: Latest updates on Covid-19

Huge second wave of Covid-19 infections

A slow vaccination drive and local restrictions after a massive second wave of infections and deaths across the country have hit economic activities such as retail, transport and construction while putting millions out of work.

India's economic growth rate picked up in January-March to 1.6% from a year earlier, but economists are increasingly pessimistic about this quarter after a huge second wave of Covid-19 infections hit the country in April-May.