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Modi Govt’s Pet Mudra Loans Not Reaching The Needy

The Prime Minister, Shri Narendra Modi addressing at the launch of the Pradhan Mantri MUDRA (Micro Units Development and Refinance Agency) Yojana, in New Delhi on April 08, 2015.

By Anjan Roy and Buddhadeb Ghosh

It is amazing how memories cling to the mind-space. Almost three decades after it was launched, the twenty point programme for the uplift of the economically weaker sections still dominates the mind space of people.

If you ask an ordinary small business person or even a block development officer (BDO) about what government aids were available for the economically vulnerable section, it will immediately be whether the question about the twenty-point programme. That is at least our experience during some extensive field visits in Uttarakhand, parts of Himachal, Tripura, Assam, Arunachal Pradesh and West Bengal. We have talked to numerous people including small traders, vegetable vendors, shop owners, graduate unemployed, fishermen, fish suppliers and local state government officials.

The government claims to have disbursed a humongous Rs. 3 lakh crore in loans from the so-called Mudra Bank in the last three years. However, on the ground in these semi-urban or small townships, no one really knows about the Mudra Bank or its loans; some have even reacted by saying whether it is a consumption item or a new soft drink. Local state officials admit that the banks are solely responsible for selection and disbursement of loans from this scheme without any linkage to the decentralized system of government.

Immediately after coming to office, Finance Minister, Arun Jaitley, had announced in his budget speech a specially targeted fund for giving loans to the really small and tiny businesses. These included the ubiquitous vegetable seller to small shop-keepers and makers of any number of small articles. The loans were for improving their business. The idea was that these self-employed people did not get much of a help from organised financial institutions.

These businesses would not generally have enough to offer as collateral for a loan from a commercial bank, nor were they equipped to negotiate the prolonged paper works that inevitably involve taking a loan from a bank. In addition, the banks as the people interviewed told us do not bother about small loans at all.

As we asked a lady entrepreneur who was running a way-side restaurant in the foothills of Himalayan region, she said she had never heard of the Mudra Bank, let alone any loans from such a source. But when said that the official figures showed large amounts have been given to small businesses, pat came the reply: “The money would then be circulating among their own networking circles as usual in India”.

Yet another man parried the question saying that the “intelligentsia” (buddhijivi) “did not want us, the ordinary and people of small means to come up. So they keep everything to themselves while floating schemes in the name of benefiting the masses.”

It is the story of all-round denial all along- a clear negation of decentralized system through electoral democracy. Think of the BDO, who should have known a Mudra Bank or its activities. His reply on questions of loans for small businesses from this new institution was that maybe any such scheme of the Central Government would have bypassed the state governments and thus no information so far was available about their activities. They should have involved the state governments or their agencies in spreading this loan scheme.

Be that as it may, but the central question thus remains: if the Union Government is claiming so much money has already been offered as loans to small and tiny units in the last three years by the Mudra Bank, how come it is not known at all at the ground level.

This is true not only in inaccessible areas in Uttarakhand or Himachal, so is the situation in Tripura or Arunachal Pradesh or Assam or West Bengal. The end of the story is that the new effort of the Union Government is a kind of mystery. But then, how to account for the fund?

One hypothesis could be that the money has in fact been given and spent but it has been categorised under other heads. Could it be that the Mudra loans are in effect the old twenty-point programme loans which the banks ordinarily give? The same loans would have been re-categorized under the Mudra head and shown as fresh loans under the new scheme. The most important of all, the people surveyed do not have any doubt that there is utter lack of awareness programme before it was implemented. The country does not live in Delhi, Mumbai, Chennai, Kolkata, Bangalore and Pune. Indians significantly live in villages still. And majority of voters are from rural areas- their voices are reflected in ballot.

It is important to be clear headed about these loans. Given to small businesses, such funding could have enormous implications. Properly used, such funding could give sustenance to the weakest businesses, and these are the best way to create fresh employment. If, as the official statistics admit, over 90% of employments generated in the country are in small informal sectors (NSSO), then it is the proliferation of such units that should generate the fresh employment opportunities we need.

In fact, these loans could be the vehicles for creation of the ten lakh new jobs that are said to be needed to absorb just the new entrants into the job-stream. Only talking about ‘demographic dividend’ and not reaching the doors of the needy may cost India heavily. So why not take these activities really seriously, and pursue effective implementation of the Mudra scheme for reaching funds to the deserving. (IPA Service)

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