Mudra Yojana: Enhancing Financial Inclusion for Underserved Communities

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Introduction

The Prime Minister Mudra Yojana (PMMY), launched in 2015, has transformed India’s financial landscape by providing accessible financing to marginalized groups, including women, minorities, Scheduled Castes (SC), Scheduled Tribes (ST), and Other Backward Classes (OBC).

Scheme Overview

The PMMY offers loans up to INR 10 lakh to small and micro-enterprises, classified into three categories based on loan amount: Shishu, Kishore, and Tarun. Shishu loans extend up to INR 50,000, Kishore loans range from INR 50,000 to INR 5 lakh, and Tarun loans cover INR 5 lakh to INR 10 lakh.

Economic Impact

In a span of eight years, the PMMY has achieved a substantial increase in both the number and amount of loans disbursed:

– The number of loans has grown from 3.97 crore in FY17 to 6.23 crore in FY23.
– The total amount disbursed has surged from INR 1.33 lakh crore in FY16 to INR 4.5 lakh crore in FY23.

Social Implications

The PMMY has played a pivotal role in promoting financial inclusion and empowering marginalized communities:

– Women entrepreneurs have significantly progressed in their businesses, as evidenced by the escalating share of Kishore accounts and disbursements under their management.
– The scheme has successfully catered to traditionally underserved segments, such as SC, ST, OBC, and women, with Shishu products attracting the highest disbursements.

Resilience Amidst Crisis

Despite the economic challenges posed by the COVID-19 pandemic, the PMMY has demonstrated resilience with strong growth in both loan disbursals and the number of accounts:

– Disbursements increased by 36% in FY23, reflecting a return of economic activity among micro, small, and medium enterprises (MSMEs).
– The scheme has fostered a robust credit culture among diverse credit seeker groups, creating a positive feedback loop for financial inclusion.

Conclusion

The PMMY has emerged as a transformative force in India’s financial ecosystem, empowering marginalized communities, promoting economic growth, and strengthening the country’s MSME sector. As the scheme continues to evolve and adapt to changing market dynamics, it is poised to further enhance the economic and social well-being of India’s diverse population.

  • Author: Dr. Emily Carter
  • Credit and Rights: OMG I Yoga
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