3 min readMay 7, 2026 06:05 AM IST First published on: May 7, 2026 at 06:05 AM ISTIn May 2020, the Centre had launched the Emergency Credit Line Guarantee Scheme (ECLGS) to support firms, especially MSMEs, in dealing with the fallouts of the Covid pandemic. The facility had benefitted 1.19 crore borrowers, with guarantees adding up to Rs 3.61 lakh crore being issued. With the West Asia conflict now disrupting economic activities once again, though the current disruptions are of a lower order of magnitude, the government has launched a similar credit guarantee scheme — ECLGS 5.0. This is a welcome measure, which could help firms bridge short-term liquidity mismatches.The scheme targets additional credit of Rs 2.55 lakh crore, including Rs 5,000 crore for airlines. Credit will be extended to MSMEs and non-MSMEs (excluding aviation) up to 20 per cent of their peak working capital utilised during the fourth quarter of the last financial year, capped at Rs 100 crore. For airlines, it will be extended up to 100 per cent, capped at Rs 1,500 crore. The moratorium under the scheme is for a period of one year for MSMEs and two years for the airline sector. This should provide relief. Economic activities have been disrupted across a range of sectors. Considering that MSMEs are unlikely to have deep pockets to absorb the surge in input costs and have limited capacity to absorb supply-chain disruptions, they are the worst-affected. In the last MPC meeting, committee member Ram Singh noted that “high input costs driven by energy spikes and supply-side disruptions have disproportionately affected the MSME sector, which lacks the working capital bandwidth to tide over these shocks”. Nagesh Kumar, another member, had said that the shortage of natural gas has “affected many MSMEs that use it as a fuel”. Airline companies, too, have been hit by the conflict. The world over, there are reports of airlines cutting flights and raising ticket prices. In the US, the surge in jet fuel prices, combined with existing financial stress, has pushed Spirit Airlines to the brink. In India, oil marketing companies raised the price of aviation turbine fuel for international flights last week, while keeping it unchanged for domestic flights — providing some relief.AdvertisementThe scale of disruption warrants that the government continue to monitor the situation. More measures may be needed if the supply-chain dislocations persist and deepen. Navigating this period will require policymakers to be nimble and surefooted.