Corporates and big businesses have easy access to institutionalised credit through banks and other financial institutions. But small businesses, often from what is called the informal sector, had a dearth of institutionalised channels of credit. Pradhan Mantri Mudra Yojana or MUDRA as it is often called, was launched on April 8, 2015, to facilitate collateral-free entrepreneurship loans to small entrepreneurs. As MUDRA completes its third year today, on April 8, 2018, we analyse what it has been able to achieve in this period of three years.
Before we get into the numbers, let’s first hear from the beneficiaries themselves – a short video created from publicly available footage at capturing the human side of the MUDRA story and its beneficiaries.
The Big Numbers
So far, in the last three years, almost 12 crore small entrepreneurs have been sanctioned collateral free loans through MUDRA. Almost Rs 5.28 lakh crore has been pumped into the entrepreneurial ecosystem at grassroots through this programme. An astonishing 9 crore women entrepreneurs are among the overall 12 crore beneficiaries of these entrepreneurship loans, making up 75% of the pie.
The Growth of MUDRA
Right in its first year, 2015-16, there were about 3.49 crore beneficiaries of MUDRA, which seemed like an impressive number for a programme that had just begun. However, MUDRA went on to better its record in the subsequent years by funding 3.97 crore entrepreneurs in 2016-17 and 4.54 crore of them in 2017-18. This shows an astonishing 30% growth in just two years, despite the fact that the base – the number of MUDRA beneficiaries in the first year – was in itself a considerably high number.
The Top Performing States in MUDRA
Below is a graphic that depicts the top 15 states in terms of number of loan sanctions. Juxtaposing this against the Per Capita NSDP throws up some interesting insights.
The Per Capita NSDP or per capita net state domestic product is an economic measure to gauge domestic production and make a comparative study of the income levels of various states. It takes into account the net state production and the absolute population of the state and gives a relative measure for comparison.
- Among the 10 states with the poorest Per Capita NSDP in the country, 7, namely Uttar Pradesh, Madhya Pradesh, Bihar, Odisha, Rajasthan, Jharkhand and Assam, are also present among the top 15 states with the highest number of MUDRA loans sanctioned. While relatively better-off states performing well in this list is not unexpected, some relatively poorer states being a part of this list is notable.
- Bihar, which has the lowest per capita NSDP in the country, stands 5th on the list with nearly 1 crore entrepreneurs funded.
- Uttar Pradesh, which has the next lowest per capita NSDP, is 4th on this list with more than 1 crore loans sanctioned.
- Another notable insight is the presence of states with relatively higher income levels – such as Maharashtra, Karnataka, Tamil Nadu and Kerala.
In sum, Mudra has been a pan India success with people living in lower income states bracket as well as with people living in higher income states bracket.
States with the highest growth in MUDRA loans between 2015-16 and 2016-17
The states which have witnessed the highest growth in the total number of Mudra Loans Sanctioned from 2015-16 to 2016-17 are shown here. Due to the lack of such granular details that captured the picture for 2017-18, we had to leave it out of this part.
Some key insights can be derived from this:
- Again, we can see that some of the states which are in the list of 10 states with lowest per capita NSDP 2014-15 at factor cost (like Tripura, Assam, Bihar and Jharkhand) have shown good growth in loans sanctioned.
- In this list of high MUDRA growth states, we can see six Northeastern states, with Tripura at the top (where the BJP recorded a historic win), and Assam, Sikkim, Nagaland, Arunachal Pradesh and Meghalaya giving it company. There has been much talk of the BJP’s foray into the Northeast, and this may provide an interesting perspective to it.
MUDRA’s impact on various demographic sections
In certain granular aspects, the data related to MUDRA is available only till 2016-17 (since FY 2017-18 has just ended and data would still being compiled before being publicly released) With this caveat in mind, here is a chart that compares the actual percentage of the population of demographic group (Census 2011) with the percentage of MUDRA loans they make up.
Out of the total number of beneficiaries in 2015-16 and 2016-17, we find that:
- Women are 48.53% of India’s population but are an overwhelming 76.12% of the beneficiaries of MUDRA. This trend, as we know, has carried on to 2017-18 as well, with women now making up 75% of the beneficiaries.
- While SCs make up 16.63% of the total population of India, they make up 17.77% of the overall MUDRA beneficiaries.
- 39% of MUDRA’s beneficiaries are minorities, which means almost a crore of them have benefited from MUDRA. Comparatively, they make up 19.40% of India’s population.
- STs are another section of society who make up a lower proportion of MUDRA’s beneficiaries as opposed to their proportion in the overall population.
The kinds of Mudra Loans and their distribution
There are three kinds of MUDRA loans:
- Shishu: loans upto Rs 50,000
- Kishore: loans above Rs 50,000 and upto Rs 5 lakh
- Tarun: loans above Rs 5 lakh and upto Rs 10 lakh
Their distribution across states makes for interesting viewing.
Here is what we see:
- States like Tamil Nadu, Karnataka, Maharashtra, Rajasthan and Uttar Pradesh find their place among the top 10 states across all loan categories.
- Tamil Nadu and Karnataka, in fact, feature among the top 4 states across categories, showing that the people of these states are among the top beneficiaries of a Union Government flagship scheme, much higher than even extremely more populous states!
- Although neighbouring states with similar NSDP indicators, there’s a significant divergence between Bihar and Uttar Pradesh. As we progress higher through the loan category, Bihar slips down the list and even exits it. However, Uttar Pradesh stays strong in the top 5 across all categories.
- Odisha appears only in the Shishu category list of top 10 states but vanishes from all others.
- Andhra Pradesh, which was not among the top 15 states in terms of the number of overall MUDRA loans sanctioned, makes an entry only in the top 10 states for Kishore category.
- As we move higher in the loan category, Gujarat too starts moving upwards. Completely absent in the Shishu category, it makes its appearance in the Kishore category and moves even higher in Tarun.
One notable point is that Mudra has done really well in Karnataka across all the three categories of loans. This state is going to polls soon and this can be a point of debate during the elections.
Mudra’s Impact on Jobs – The SKOCH Report
We came across a report from the SKOCH Group on MUDRA which throws interesting light on the scheme’s impact on job creation. The basic findings of the report say that 5.5 crore jobs have been created through MUDRA loans. The period under study were the first two years after the scheme was launched in April 2015.
In its assessment of MUDRA’s impact, the report says that the scheme has been proving to be a game-changer “because the impact it has had on promoting entrepreneurship and job creation is impressive.” The study was made at the ground-level, by means of which primary data collected from MUDRA (as in, Micro Units Development and Refinance Agency), banks, financial institutions, as well as beneficiaries of the scheme, was analysed. The findings led the report to conclude that MUDRA has “been the biggest, and one of the most cost-effective tools, for job creation.”
Let us briefly look at the key findings of the study in terms of jobs data.
According to the SKOCH report, the total number of jobs created is 5.5 crore (report was published on September 8, 2017).
Among these, the figure for direct jobs created is 3.77 crore and the figure for indirect jobs created is 1.67 crore.
Again, 2.6 crore jobs were created for the SC/ST/OBC segments.
Let us now look at some other interesting data from the report.
In the Shishu loan category, approximately 7.6 crore accounts were opened at the time of the report. Jobs per 100 accounts in Shishu loans was 39.6. And total number of direct jobs created under Shishu loans was approximately 3 crore.
In Kishore loans category, approximately 52.5 lakh accounts were opened. Per 100 accounts, 110.8 jobs were created. Again, approximately 58 lakh direct jobs were created.
In Tarun loans category, approximately 10.5 lakh accounts were opened. Per 100 accounts, 158.7 jobs were created. Again, approximately 16.7 lakh direct jobs were created.
In the Shishu category, approximately 75 lakh indirect jobs were created, bringing the total number of jobs to approximately 3.8 crore.
In the Kishore category, approximately 58 lakh indirect jobs were created, bringing the total number of jobs to approximately 1.16 crore under Kishore loans.
In the Tarun loans category, approximately 33.4 lakh indirect jobs were created, bringing the total number of jobs in the category to 50 lakh.
Indirect Jobs Per Direct Job
The SKOCH report also deals with the figures showing the proportion of indirect jobs created vis-à-vis direct jobs. Below is the break-up:
Under Shishu, per direct job, 0.25 indirect job was created.
Under Kishore, per direct job, 1 indirect job was created.
Under Tarun, per direct job, 2 indirect jobs were created.
The significance of the findings of the SKOCH report can be summed up as showing that MUDRA is not only successfully providing institutional finance to 5.77 crore small business units but it also promoting and boosting entrepreneurship across India. Another interesting detail is that MUDRA Yojana has helped 5 lakh weavers in the handloom sector. This would appear to show a convergence of MUDRA with other government schemes. The bottom-line is that MUDRA is reaching out to and including those at the bottom of the pyramid by creating new jobs and entrepreneurs. It has not only helped first time entrepreneurs but has also helped existing entrepreneurs to expand their business. Coupled with the significant expansion in formal jobs in the last three years, it would seem that the debate on jobs and employment has to be looked at through a completely new lens.