Only 20% of Mudra Loan Beneficiaries Started New Businesses, Govt Survey Shows

A report on the Pradhan Mantri Mudra Yojana Survey also found that half of the additional jobs created under the scheme were "self-employed or working owners."

New Delhi: A draft labour ministry report accessed by the Indian Express has raised doubts over the success of the government’s flagship Pradhan Mantri Mudra Yojana in generating employment and encouraging entrepreneurship. A survey conducted between April-November 2018 by the ministry, which is yet to be released, revealed that just one of every five beneficiaries of Mudra loans used the funds for setting up new businesses, while the rest used it to expand their existing businesses.

Out of 94,375 surveyed beneficiaries, 19,396 (20.6%) set up new businesses while the remaining 74,979 (79.4%) expanded existing ones.

“The Draft Report on Pradhan Mantri Mudra Yojana Survey found that 1.12 crore additional jobs were created during April 2015-December 2017,” the English daily stated. This is less than 10% of the number of loans offered. Under the scheme, 12.27 crore loan accounts received a total of Rs 5.71 lakh crore in the first three years (2015-2018). The draft report, however, does not share the break-up of additional jobs created by new and existing units.

Services and trading accounted for more than two-thirds (67.57%) of the additional jobs created while manufacturing added just 11.7%.

Also read: How Many Jobs Are Really Being Created by the Modi Govt’s Mudra Scheme?

The survey also offers a glimpse into the types of these additional jobs created under the scheme. Out of the 1.12 crore jobs, almost half (51.06 lakh) were “self-employed or working owners, which also included unpaid family members while 60.94 lakh were employees or hired workers.”

“The government had planned to use the findings of this survey to counter the National Sample Survey Office (NSSO) report on unemployment, which estimated the unemployment rate to be 6.1% in 2017-18, a record high,” it added.

Launched in 2015, the Mudra scheme facilitates collateral-free loans for small businesses under three categories: Shishu (up to Rs 50,000), Kishor (Rs 50,000-5 lakh) and Tarun (Rs 5 lakh-10 lakh).

The daily said a detailed questionnaire sent to the Ministry of Labour and Employment remained unanswered.