Appraisal of PM MUDRA Yojana

Appraisal of PM MUDRA Yojana

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April 22, 2023

Recently, the PMMY or, the Pradhan Mantri MUDRA Yojana celebrated its eighth anniversary, contributing significantly to the participation of numerous populations who have previously been underrepresented as entrepreneurs.

What exactly is the Pradhan Mantri MUDRA Yojana (PMMY)?

• Initially, PMMY offers collateral-free loans of up to ten lakh rupees to non-corporate, non-farm small/micro firms.

• PMMY was established in 2015 with the goal of encouraging young people to become first-generation entrepreneurs.

• These loans are made available through MUDRA-approved banks, non-bank financial companies (NBFCs), microfinance institutions (MFIs), and other qualifying financial intermediaries.

• MUDRA has developed three products: “Tarun”, “Kishore” and "Shishu".

What are PMMY's accomplishments?

• New enterprises - The Mudra Scheme has resulted in the creation of 8 crore new enterprises.

• Filling the gap - The plan has the potential to bridge the gap between India's microfinance and banking sectors in terms of lending to microentrepreneurs.

• Poverty subculture - The PMMY has decreased poverty subculture in a short period of time.

• Banks within regions without banks - PMMY supplied loans to the poorest half of India, including unbanked areas.

• Innovation - It stimulated innovation, a creative ecosystem, and the risk-taking appetite of entrepreneurs, resulting in a large number of job possibilities.

• First-time entrepreneurs - Shishu loans have the biggest percentage (40%), indicating that the PMMY has substantially assisted first-time businesses.

• Inclusion - The PMMY has benefited all sectors of Indian society, including the general, schedule caste/tribe (SC/ST), and other backward classes (OBCs).

• The SC/ST and OBC groups account for 51% of all Mudra accounts.

• Women's empowerment - 69% of accounts are held by women.

• Loan disbursements to women businesses are expected to increase by 28% by 2022.

• Equality of distribution - Because it is a nationwide plan, it has demonstrated balanced penetration and economic growth throughout India.

• The PMMY has resulted in overall benefits for states like as Uttar Pradesh, Orissa, and Bihar.

During these eight years, the PMMY fulfilled its overall goal of equal and fair geographical distribution of benefits.

What are the long-term goals?

• Effective use of the benefits of 5G technology and e-commerce.

• Increased awareness of Mudra cards and expansion into rural areas.

• The scheme might be expanded to include personal sectors other than farming and industries.

• They can begin a loan funding of less than Rs 50,000 to bridge the 0-50k gap.

Source - The HINDU & Business Today