Over 90% beneficiaries under PMMY scheme got loans less than Rs 50,000

NEW DELHI: Over 90% beneficiaries under the government’s ambitious Pradhan Mantri Mudra Yojana (PMMY) were given loans of less than Rs 50,000. This fact emerged from a scrutiny of the government data.

Under the scheme, loans up to Rs 10 lakh are provided to small entrepreneurs to set up micro units. However, a number of stakeholders, including traders’ associations, bank officials and policy experts,

TNIE spoke to said that an amount of Rs 50,000 or less could hardly help one in setting up or expanding a business.

Under PMMY, disburse loans under three categories —Shishu (up to Rs 50,000), Kishore (Rs 50,000-Rs 5 lakh) and Tarun (Rs 5 lakh-Rs 10 lakh). 

A break-up of the data disclosed that of the total 13.47 crore people who have availed of Mudra loans since its inception in 2015, 12.23 crore received the payouts under the Shishu category. 
Over 1.04 crore people got loans under the Kishore category and only about 19 lakh people received the payouts under the Tarun category. 

Asserting that granting loans of Rs 50,000 or less defeated the very purpose of the scheme, Rakesh Kumar, president of Federation of Sadar Bazar Traders’ Association in Delhi, said, “Let alone a small enterprise, even a street vendor can’t start a business with Rs 40,000-Rs 50,000 in any city. In Delhi’s Sadar Market, even a patriwala (roadside vendor) has items worth more than Rs 50,000.”

Kumar said in many cases, people got loans with the help of middlemen and had to pay commissions. “Many such people would not return the money to the banks,” he said, explaining one of the possible reasons for a massive Rs 11,000 crore (approximately) of Mudra loans turning onto bad loans. 
However, Anil Bhardwaj, Federation of Indian Micro and Small & Medium Enterprises, had a different opinion. “This is a loan for micro-financing and may help people in rural areas… People can start tea selling or some similar business,” he said.

Meanwhile, under a relentless Opposition attack on the issue of job creation, the government has planned a comprehensive study to assess the impact of PMMY on the outreach and access for micro-entrepreneurs. The study will cover about 1,00,000 PMMY borrowers. 

The study will assess whether the scheme has led to any changes in the income/asset growth of the beneficiaries; in the business in terms of increase in turnover, income, employment etc.; recovery of assets hypothecated or mortgaged, among others.