How Many Jobs Are Really Being Created by the Modi Govt's Mudra Scheme? -Noor Mohammad
Figures highlighted in an RTI reply cut to the heart of a debate over the government’s assertion to count Mudra loan beneficiaries as employed.
New Delhi: Struggling to deliver on the poll promise to create one crore jobs a year, the Narendra Modi government and the BJP may have found a face-saver in the flagship self-employment Mudra scheme, launched under the Pradhan Mantri Mudra Yojana (PMMY) in 2015.
However, three years in, the scheme may not be a high job creator that it has been made out to be.
The number of larger-sized loans – of more than Rs 5 lakh – that can create real jobs are just a tiny percentage, or 1.3%,of total loans disbursed under the scheme, reveals an RTI query .
The figure has been disclosed by the department of financial services under the finance ministry in reply to a query from Chandan Kamhe, a Delhi-based RTI activist.
The balance loans were in sizes of less than Rs 50,000 and of between Rs 50,000 and Rs 5 lakh.
Specifically, Mudra loans worth Rs 2,53,677.10 crore to 4.81 crore beneficiaries were given in 2017-18, which translates into average loan size of Rs 52,700, an amount just too small to finance any scalable business model with employment generation potential, say experts.
These figures cut to the heart of a debate over the government’s assertion to count Mudra loan beneficiaries as employed.
The loan scheme focuses on meeting the capital requirement of first-time women, Dalit entrepreneurs. A total of 12.61 crore Mudra loans have been sanctioned till May 3, 2018. Of these, applications for loans of more than Rs 5 lakh approved were just 17.57 lakh.
Banks and microfinance institutions (MFIs) account for roughly 65% and 35% of lending under the Mudra scheme. Lending rose from Rs 1,32,954 crore in 2015-16 to Rs 2,46,437 crore in 2017-18 – an increase of over 85% .
In the run-up to the 2014 general elections, Modi had promised to create jobs on the campaign trail. But he has largely changed tack after coming to power, saying that he wants to turn job-seeking youth into job-creators.
But there is a catch – most self-employed people may not have full-time work and may be actually underemployed, according to economists.
Labour economist Santosh Kumar Mehrotra told The Wire that with an average loan size of a little more than Rs 50,000, an individual cannot support himself with this measly amount, let alone employ others.
Besides, the quality of these loans is somewhat risky given that they are allocated without any collateral, he added.
However, unfazed by the criticism, the Modi government and BJP have strongly defended the changed narrative and hailed the success of Mudra scheme to prove their point. Although there is no official data on how many jobs have been created through the scheme, number of loan beneficiaries is often taken as jobs generated.
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