The government announced extending the Emergency Credit Line Guarantee Scheme to the civil aviation sector, a move that is expected to provide a liquidity solace for the pandemic-hit segment. The civil aviation sector has been facing strong headwinds due to the coronavirus pandemic and looking at possible help from the government.

What

  1. Recently, the civil aviation ministry allowed domestic airlines to reduce the capacity to 50 per cent from 1 June 2021 in the wake of the second wave of the pandemic.
  2. Air travel demand has been impacted due to the lockdowns and strict restrictions by various state governments to deal with the pandemic.
  3. Last month, domestic airline companies had reportedly sought reduction in capacity besides financial assistance to tide over the cash burn amid the nose-diving demand.
  4. In a statement, the finance ministry on 30 May 2021 said that on account of the disruptions caused by the second COVID-19 wave to businesses across various sectors of the economy, it has been decided to enlarge the scope of ECLGS. The civil aviation sector to be eligible under ECLGS 3.0, it added.
  5. In March, ECLGS 3.0 was introduced to cover business enterprises in the hospitality, travel and tourism, leisure and sporting sectors.
  6. The ministry has also removed the current ceiling of Rs 500 crore of loan outstanding for eligibility under ECLGS 3.0, subject to maximum additional ECLGS assistance to each borrower being limited to 40 per cent or Rs 200 crore, whichever is lower.