Ease of Doing Business for MSMEs: Shah credited the Mudra scheme for the generation of 3.72 crore jobs and the disbursement of over 40 crore loans by the year 2023.
Ease of Doing Business for MSMEs: Mudra loans worth Rs 22 lakh crore have been disbursed as of April 2023, stated Home Minister Amit Shah in a series of tweets. Shah highlighted several milestones and achievements contributing to the economic progress of the country. He also credited the Mudra scheme for the generation of 3.72 crore jobs and the disbursement of over 40 crore loans by the year 2023. According to the Mudra scheme portal, approximately Rs 4.5 lakh crore loans were disbursed in FY23.
The tweet read, “PM @narendramodi Ji laid the foundation of a prosperous economy through financial inclusion and investing in India’s dreams with the Mudra loan scheme. Through #9YearsOfEconomicReforms India became the world’s 5th largest economy thus making a quantum leap in FDI.”
The Pradhan Mantri Mudra Yojana (PMMY) was launched in 2015 by Prime Minister Modi to provide loans of up to Rs 10 lakh to non-corporate, non-farm small and micro enterprises. The scheme offers loans under three categories: Shishu (up to Rs 50,000), Kishore (from Rs 50,000 to Rs 5 lakh), and Tarun (from Rs 5 lakh to Rs 10 lakh).
It is interesting to note that the default rate under the Mudra loan is comparatively low at about 3.3 per cent. This data was shared by the Minister of State, Finance Ministry, Bhagwat Karad in a written reply in Rajya Sabha. This is in contrast to other forms of bank credit which have a default rate of nearly five per cent, according to the Economic Survey 2023.
“Since Mudra loans are smaller loans ranging from Rs 50,000 to Rs 1 lakh, their recovery is generally ensured through personal follow-ups and reminders. In cases where non-payment issues arise despite rigorous follow-ups, the loans are classified as NPAs and legal actions are taken through state recovery laws or other legal measures like civil suites,” Saket Dalmia, President, PHD Chamber of Commerce and Industry told FE Aspire.
The minister also highlighted the remarkable growth in digital transactions which reached Rs 15,468 lakh crore between 2017 and 2023. Other milestones mentioned included UPI transactions worth Rs 309.7 lakh crore since 2016, Rs 273 lakh crore nominal GDP value in FY23, and $84 billion FDI in FY22.
According to the latest data from the National Payments Corporation of India (NPCI), person-to-merchant (P2M) payments surpassed 5.36 billion transactions, with a total value of Rs 3.44 lakh crore in May 2023.
Notably, Shah’s tweet also mentioned the reimbursement amount of Rs 9190.45 crore by the government under the Aatmanirbhar Rojgar Yojana (ABRY). The scheme was launched under the Government of India’s Covid relief package to incentivise employers for creating new job opportunities.
The tweet also revealed that more than 312 crore E-way bills have been generated since it was introduced in April 2018 till March 2023.
“Digitisation reforms such as E-Way bills have helped create a level-playing field for small and large businesses. Greater access to information and more predictable and transparent rules and procedures can reduce the disadvantages SMEs face when compared to larger businesses,” Nikita Singla, Associate Director at the Bureau of Research on Industry and Economic Fundamentals (BRIEF), told FEAspire.
“A paperless trade ecosystem achieved through effective implementation of digital platforms plays an instrumental role in improving the overall trade competitiveness and enhancing the ease of doing business for SMEs, ” Singla added.
“This shift in focus allows MSMEs to harness their potential for growth and contribute to overall economic development and allows them to not only streamline their operations but also explore new markets, diversify their offerings and embrace digital transformations. It’s high time for the MSMEs to position themselves as agile, resilient, and forward-thinking contributors to economic growth and job creation,” said Vineet Tyagi, Global CTO at Biz2Credit and Biz2X.