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India's economic growth rate picked up in January-March to 1.6 per cent from a year earlier, but economists are increasingly pessimistic about this quarter Image Credit: Luis Quintero

Delhi: India has extended a federal guarantee on bank loans to the country’s health and tourism services while waiving visa fees for 500,000 foreign tourists, the finance minister said on Monday, stepping up support for the pandemic-hit economy. The government will expand federal guarantees on loans to businesses to Rs4.5 trillion ($60.7 billion) from an earlier limit of Rs3 trillion, finance minister Nirmala Sitharaman said.

It will also provide a guarantee of Rs1.1 trillion on loans to the health sector and medical infrastructure, which will enable them to raise loans at a lower interest rate of 8-8.25 per cent a year.

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