Pradhan Mantri Mudra Yojana (PMMY), is an ambitious scheme launched by PM Modi in 2015 to boost small/micro enterprises by providing them with loans up to Rs 10 lakh. This scheme has been promoted by the Modi govt as one of its success stories. However, a recent RTI revealed that of the 6.37 lakh crore sanctioned under this scheme, Rs 10,915.07 crore has turned into a non-performing asset (NPA), as reported by The New Indian Express.

Maximum number of defaulters under the Shishu category

Under PMMY, the banks are required to grant loans up to Rs 1 lakh to non-farming micro-enterprises under three categories. The three categories are-”Shishu”, “ Kishore” and “Tarun”. Under the Shishu category, loan of up to Rs 50,001 may be granted, under Kishore, a loan of Rs 5,00,001 may be granted and Rs 10 lakh under the Tarun category.

PM Modi had said that people’s dream of fulfilling their dreams of owning a business had been realised due to this scheme. BJP party president Amit Shah had earlier said that about 7.28 crore people have become self-employed, thanks to this scheme.

According to the RTI response, as of August 3, about 13.47 crore account holders have been sanctioned loans amounting to Rs 6.37 lakh crore. However, of the Rs 6.37 lakh crore sanctioned, Rs 10,915.07 crore has turned into NPA. The RTI also revealed that the maximum number of defaulters are those who have availed benefits under the Shishu category.

Reason for NPAs

Experts opine that the reason behind the NPAs is two-fold. One reason is that the loans are being given without any security. This makes it very difficult to go after the defaulters. The second reason is that the banks give out loans unabashedly in order to fulfil the disbursal target. In this bid, the credentials of the loan-seekers are not properly verified.

Policy expert Devinder Sharma told The New Indian Express, “I remember that a similar scheme was launched by Haryana CM Devi Lal and a major portion of the scheme had turned into NPAs. In this scheme also the government has just doled out money to people without any security and lakhs of the accounts has turned into NPAs.”

Graph gaffe

As reported by The Quint, on October 22, BJP on Twitter tweeted (now deleted) a graph titled “Promoting entrepreneurship and empowering youth with financial security”. This graph shows that in the financial 2018-2019, Rs 1.10 lakh crore was sanctioned to 2.08 crore beneficiaries.

The graph shows incorrectly an upward trend from the year 2017-18 when the government disbursed Rs 2.53 lakh crore to 4.81 crore beneficiaries. The actual graph should look like this:

A benefit of the doubt could have been given if the graph was about the cumulative growth, however, the graph clearly speaks of yearly growth.

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