“It will provide high insurance cover for exporters while lowering the premium for small exporters. To achieve higher export credit disbursement, a new scheme NIRVIK will provide for high insurance cover, reduction in premium for small exporters, and simplified procedures for claim settlement.” said the finance minister Sithraman in her Budget speech in 2020-21.
In 2019, ten of the thirty exporting sectors had a drastic drop. In December, India’s exports fell 1.8% to USD 357.39 billion for the 5th time in a row. This led to a trade deficit of USD 118.10 billion. Credit disbursement fell from Rs 12.39 lakh crore in 2017-18 to Rs 9.57 lakh crore in 2018-2019. Exporters expressed concern about a lack of credit. Thus the Government proposed the Niryat Rin Vikas Yojana. The goal of the NIRVIK scheme was to increase export credit disbursement. This scheme focuses on small exporters.
The UPSC examination may include NIRVIK Scheme-based questions. This article will discuss the scheme in detail.
What is NIRVIK Scheme or Niryat Rin Vikas Yojana?
What is NIRVIK Scheme or Niryat Rin Vikas Yojana?
On February 1st, 2020, the Finance Minister announced the NIRVIK scheme. NIRVIK stands for Niryat Rin Vikas Yojana. NIRVIK is also known as Export Credit Insurance Scheme (ECIS). India’s Export Credit Guarantee Corporation (ECGC) manages this scheme.
What is EGEC?
EGEC stands for Export Credit Guarantee Corporation of India. the Ministry of Commerce and Industry owns ECEG Ltd. The Government of India had set up the Export Risks Insurance Corporation in 1957. Then it changed to ECGC Ltd in August 2014. Its goal was to promote exports from the country. It offers credit risk insurance and other services.
Goals of NIRVIK scheme
- The scheme’s main goal is to lower the risk of non-payment.
- It aims to grow the Indian economy’s export sector.
- The goal of this scheme is to enhance loan availability and ease the lending process.
- This scheme will increase credit availability for small-scale exporters.
Features of the Scheme
- The NIRVIK Scheme would assist exporters in lowering premiums.
- It will cover up to 90% of the principal and interest on the loan.
- Insurance includes both pre-and post-shipment credit.
- For the time being, the ECGC gives a credit guarantee of up to 60% loss.
- This scheme will keep foreign export credit interest rates below 4%. For exporters, the rupee export credit interest rates would be 8%.
Benefits of the Scheme
- Small exporters will get insurance coverage under this scheme. They will also be able to expand exports to a larger scale.
- It will have an impact on exports and export rules.
- This program will improve market share. And will help in competition in the global market.
- This Scheme helps in reducing the risk of loss or damage to the products transported to the buyer.
- Credit for exporters will become more accessible and affordable.
- To become exporter friendly, it will drop red tape and barriers in procedures.
- Extended insurance cover has many benefits. such as lowering the cost of credit by capital relief, better liquidity, etc.
- Small businesses will benefit due to simple ECG procedures.
Summary of NIRVIK Scheme
| Sr. no. | Features | NIRVIK |
| 1 | Name of the scheme | Niryat Rin Vikas Yojana or
Export Credit Insurance Scheme (ECIS) |
| 2 | Official website | https://www.ecgc.in |
| 3 | Launched by | Export Credit Guarantee Corporation (ECGC) |
| 4 | Date of launching | February 1st, 2020 |
| 5 | Announced by | Finance minister Nirmala Sitaraman |
| 6 | Prepared by | Commerce and Industry Ministry |
| 7 | Beneficial for | Small exporters |
| 8 | Goal | Improvement of the Indian economy’s export sector |
| 9 | Scheme period | 5 years |
| 10 | foreign export credit interest rates | below 4%. |
| 11 | rupee export credit interest rates | below 8%. |
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