Nirmala Sitharaman laments lack of progress on loan guarantee scheme for medical infrastructure

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Finance Minister Nirmala Sitharaman on August 31 took stock of the loan guarantee scheme for Covid-affected sectors and reiterated the need to ramp up co-ordination efforts in ensuring effective implementations of the scheme. She noted that it is extremely important to improve medical infrastructure in smaller towns and cities and awareness campaigns need to be held so that every stakeholder is on board in this initiative.

“We need this (scheme) to be done within time. I think there needs to be a lot more information sharing in local areas. We cannot afford delays. We need this to be done at the earliest so that capacities are ramped up for any future third wave…if at all,” she said.

The scheme would be applicable to all eligible loans sanctioned up to March 31, 2022, or till an amount of Rs 50,000 crore is sanctioned, whichever is earlier.

The Finance Minister said the government is engaging with the stakeholders to ensure the economy’s revival happens without any further roadblocks.

The Union Cabinet had  approved 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 and medical infrastructure.

The main objective of the Loan Guarantee Scheme for Covid-Affected Sectors (LGSCAS) is to partially mitigate credit risk (primarily construction risk) and facilitate bank credit at lower rates of interest 7.95 per cent per annum.

The scheme is aimed at boosting medical infrastructure in the country, specifically targeting underserved areas. The scheme provides a guarantee of 50% for brownfield projects and 75% to greenfield projects for loans sanctioned up to Rs 100 crore, set up at urban or rural locations other than eight tier-1 cities.

For aspirational districts, the guarantee cover for both brownfield expansion and greenfield projects shall be 75%.