When supply chains seized up, and businesses haemorrhaged cash during Covid-19, India deployed a financial lifeline called ECLGS, or the Emergency Credit Line Guarantee Scheme, that eventually reached over one crore MSMEs and drew praise from both the IMF and the World Bank. On May 5, 2026, the Union Cabinet, chaired by PM Narendra Modi, brought it back as "Emergency Credit Line Guarantee Scheme 5.0", this time in response to the West Asia conflict.
ECLGS 5.0, approved on Tuesday, target a total additional credit flow of ₹2,55,000 crore, with a dedicated ₹5,000 crore earmarked specifically for airlines. The government itself bears a ₹18,000 crore outlay as the cost of underwriting this credit guarantee.
Businesses, MSMEs and non-MSMEs alike, with standard accounts as of March 31, 2026, can access additional credit of up to 20 per cent of their peak Q4 FY26 working capital, capped at ₹100 crore.
The Centre would guarantee 100 per cent of the loan for MSMEs and 90 per cent for larger businesses and airlines, through the National Credit Guarantee Trustee Company Limited (NCGTC). The guarantee fee is zero. Airlines get even more generous terms, such as up to 100 per cent of their credit exposure, capped at ₹1,500 crore per borrower, with a 7-year loan tenor including a 2-year moratorium.
The ongoing West Asia conflict has reportedly been disrupting Indian supply chains, trade finance, and aviation routes in ways that threaten short-term liquidity.
But is there any risk involved in ECLGS 5.0? Union Minister Ashwini Vaishnaw said, "The most important thing about this model is that there is no moral hazard—the possibility of misuse is practically minimal." The scheme runs until March 31, 2027, according to the Centre.