PM SVANidhi Yojana; Honest Attempt Required at the Field Level to make Success
The Covid19 pandemic has impacted businesses and livelihoods across every strata of the society but the most vulnerable have been the informal sector. For a country like India, where the informal sector still employs a large chunk of the employable population, it was very important for the government to handhold the small and micro businesses amidst the crisis, and at the same time give them a business environment that facilitates their normal transition to the formalized economy.
The future trajectory of India’s economy is dependent upon the growth and success of its small and micro enterprises which have primarily been job creation centers for the majority of the skilled and semi-skilled workforce. Though governmental fiscal interventions during the pandemic have been criticized for not doing enough to put money in the hands of the poor, and for primarily focusing on the supply side instead of the demand side of the problem, the government seemed to have actually used the JAM( JanDhan-Aadhar-Mobile) trinity network and the banking networks across the country to make cash available to the neediest strata of society through various schemes.
One among these schemes, particularly of help to street vendors who have been severely affected by the Covid19 pandemic, has been the PM SVANidhi Yojana. The scheme which aims to facilitate street vendors with a collateral free loan up to 10,000 rupees at an interest subsidy @7 % has been quite popular among the small businesses that run in the informal sector and have had significant number of takers since its inception. The scheme also has provisions for higher loan eligibility upon timely repayment of the existing loan. As of date, about 31 lakhs of street vendors have benefited from the scheme country wide, and the government along with various lending institutions are organising “Main Hi Digital” programs across the country to create awareness among the general public for the schemes and bring in more street vendors to avail the loan.
The government has also allowed street vendors who are not covered under the urban local body-led surveys to avail this scheme which ensures every street vendor from the formal or informal sector can be eligible for the scheme. Such schemes not only aim at lending a helping hand to distressed small businesses, but also, at large, aim at facilitating working capital to the strata of society that would otherwise have to go to private lenders and borrow money at high interest. Institutional loan facilitation like these are also meant to send a larger message of government’s willingness to bring in street vendors into the formal fold.
The enabling infrastructure. The PM-SVANidhi schemes require beneficiaries to onboard Digital payment platforms. Schemes like these have been primarily successful due to the digital infrastructure that the government has created under the “Digital India scheme” since it came to power in 2014. The Jan Dhan -Aadhar- Mobile (JAM trinity), which is the foundation of “Digital India ”, has played a significant role in taking across the benefits of various government schemes to the most vulnerable sections of society. Apart from ample usage of digital infrastructure, the government has also been roped in networks of banks (public, private, co- operative, small finance), NBFCs and MFIs by providing credit guarantee to these institutions. This has ensured that street vendors from far flung places and hinterlands can also have access to the scheme.
Despite the significant rise in the number of beneficiaries on a month-to-month basis, there still remains issues that need attention to further streamline the process. Urban Local Bodies (ULB’s), which is a crucial connecting point between the lending agency and the eligible applicants, need to play a more proactive role. Many applications are kept pending due to the lack of letter of recommendation from the ULB’s. Further, ULB’s lack of pace in recovery efforts have also affected the scheme and loan disbursement efforts. Migration of street vendors to their respective villages during lockdown has also affected the applicant targeting process to some extent.
The focus on the informal sector in India, which employs around 80% of the workforce, has to increase. One important starting point could be gathering more and more reliable data on the informal economy and the people who are employed in it through larger involvement of the urban local bodies. Secondly, the government should work on similar schemes that aim at bringing up the benefits of formalization, and simultaneously at reducing the cost of formalisation for small and micro informal enterprises. Voluntary formalisation, rather than a forced one, is the way forward for the Indian economy to take the informal sector along on its path to recovery.
PM-SVANidhi is an excellent scheme that has been successful in reaching a considerable number of beneficiaries in a short span of time. However, private banks which presently constitute merely around 2% of the total disbursed loan amount could play a larger role in the process. This particular scheme has been a success story and will be a foundation stone for many such schemes coming in the future that will aim towards helping the informal sector and the population that depends upon it.
