Recently, India’s Pradhan Mantri Mudra Yojana (PMMY) has successfully completed eight years of its launch.
About Pradhan Mantri Mudra Yojana (PMMY)
It is one of the flagship schemes of the Union government to encourage self- employment. The scheme targets micro and own-account enterprises that are mostly engaged in manufacturing, processing, trading and services.
These units were largely self-financed or relied on moneylenders because the country’s formal architecture was unable to reach out to them and meet their financial requirements.
Hence, the PMMY was launched to bridge the gap between a large unbanked sector and formal lenders.
The scope of the scheme has widened with the time. For example, initially it covered income-generating activity only in the sectors of manufacturing, trading and services.
However, since 2016-17, activities allied with agriculture and their support services promoting livelihoods have been brought under its ambit.
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PM MUDRA Scheme:
Launched in 2015, PMMY provides collateral-free institutional credit up to ₹10 lakh.
As provided by Member Lending Institutions (MLIs): i.e Scheduled Commercial Banks (SCBs), Regional Rural Banks (RRBs).
Non-Banking Financial Companies (NBFCs) and Micro Finance Institutions (MFIs).
Under the aegis of the PMMY, the Micro Units Development and Refinance Agency (MUDRA) created three sub-schemes that differ by the loan amount:
Shishu (for loans up to ₹50,000), Kishore (₹50,001–₹5 lakh) and Tarun (₹500,001–₹10 lakh).
The names Shishu, Kishore and Tarun also signify the stage of the beneficiary micro unit’s growth or development and its funding needs.
Any individual who is otherwise eligible to take a loan and has a business plan for a small business enterprise can avail of credit under the scheme.
Since its launch, the scheme has undergone numerous changes.
Its target area for example, has been widened to maximize its positive economic impact.
Initially, the PMMY covered income- generating activity only in the sectors of manufacturing, trading and services.
However, since 2016-17, activities allied with agriculture and their support services promoting livelihoods have been brought under its ambit; since 2017-18, loans have been sanctioned for the purchase of tractors and power tillers; and from 2018-19, loans to buy two wheelers for commercial purposes have also been included.
Need of Hour:
Poverty, climate change and overexploitation of natural resources threaten sustainable development and SDGs.
India is a vast country and many microfinance models are required.
In the coming years, it is imperative that the PMMY reaps the benefits of 5G technology and e-commerce, even as Mudra cards are popularized further.
Encouraging the registration and formalization of own-account enterprises could be another way of taking this scheme to new highs.
The MUDRA scheme aims to be an engine of transformation, which makes the micro-enterprises of this nation a potent instrument of employment and GDP growth.
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