Mudra loan reality check: Each job costs Rs 5.1 lakh; only 20 percent borrowers started new business

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New Delhi | Published: September 4, 2019 1:22:35 PM

Mudra loan effect: The draft report has found that as many as 1.12 crore additional jobs were created during the first 33 months (April 2015-December 2017) of the implementation of the scheme

mudra loan impact on job creationMudra loans: In 2017-18, Tamil Nadu was the top-performing state in terms of the Mudra loans. Representational image/@https://www.mudra.org.in/

Mudra loan impact: A draft report on Pradhan Mantri Mudra Yojana (PMMY) prepared by the Labour Bureau under the Ministry of Labour and Employment offers a reality check for the Narendra Modi government, which had been claiming that Mudra scheme is an engine for entrepreneurship and employment. Not just the number of Mudra beneficiaries starting a new business has been found to be low but also the cost of additional job creation vis-a-vis the loan amount has been very high, according to a report by The Indian Express. The draft report has found that as many as 1.12 crore additional jobs were created during the first 33 months (April 2015-December 2017) of the implementation of the scheme.

Of the total 1.12 crore “additional” jobs, 51.06 lakh were self-employed or working owners, including unpaid family members. There were 60.94 lakh employees or hired workers. According to the IE report, only one of five beneficiaries (20.6 per cent) availed the Mudra loan for starting a new business while the remaining applicants used the Mudra money for expanding their existing business. The report also said that the number of additional jobs created in 33 months was less than 10 per cent of the total number of loans.

Mudra loan: Costly job creation

The survey was conducted during April-November 2018, studying 97,000 beneficiaries. During the first three years, Rs 5.71 lakh crore of loans was sanctioned under three categories of the scheme – Shishu, Kishor and Tarun. The loans provided under Shishu category led to the creation of 66 per cent new jobs. The new job creation percentage for loans under Kishor and Tarun categories were 18.85 per cent and 15.51 per cent respectively.

Dividing the total amount of loan disbursed by the number of additional job created, one comes to the conclusion that around Rs 5.1 lakh in Mudra loan was extended for creation of each additional job.

Shishu category – Most popular

The PMMY Annual Report 2017-18 had said that an amount of Rs 5.71 lakh crore was sanctioned under the scheme in the first three years. This amount went to nearly 12.27 crore Mudra loan account. “Among the three categories, Shishu loan had the highest share of 88.65% in terms of number of accounts and which was followed by Kishor and Tarun. The share of Kishor loan accounts increased to 9.67% in FY 2017-18 compared to 6.71% in FY 2016-17. Share of Tarun loan also increased slightly,” said the annual report.

Mudra loan: Top states

In 2017-18, Tamil Nadu was the top-performing state in terms of the Mudra loans. It was followed by Karnataka, Maharashtra, Uttar Pradesh and Maharashtra in top five.

The then Union Finance Minister Piyush Goyal had informed the Parliament in interim budget speech on February 1 this year that 15.56 crore loans worth Rs. 7,23,000 crore were disbursed under the Mudra scheme.

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