India is considering offering as much as 500 billion rupees ($6.8 billion) of credit incentives to boost health care infrastructure in the nation hit by the coronavirus pandemic, according to people familiar with the matter.

 

The program will allow companies to access funds for ramping up hospital capacity or medical supplies with the government acting as a guarantor, said the people, who asked not to be identified citing rules. The focus is likely to be on strengthening Covid-19 related health infrastructure in smaller towns, they said.

.An explosive outbreak of the virus in India in recent months overwhelmed the nation’s deficient health care infrastructure, leading to a shortage of everything from hospital beds to oxygen supplies. The government’s loan guarantees will complement the central bank’s efforts last month to boost credit for health care services and provide fresh lending to vaccine-makers.

The Reserve Bank of India had then announced an on-tap liquidity window for banks worth 500 billion rupees to extend credit to health services and vaccine manufacturers until March 2022.

The government also last month separately announced including airlines and hospitals in a $41-billion emergency credit program to cushion them from the impact of the pandemic. That program guarantees loans worth 20 million rupees to hospitals and clinics to set up on-site oxygen generation plants, with interest rates capped at 7.5%.