Prime Minister Narendra Modi launches MUDRA Yojana with Shri Arun Jaitley and Shri Jayant Sinha in April 2015 (Pic - The New Indian Express)

Pradhanmantri MUDRA Yojana (Mudra refers to Micro Units Development and Refinance Agency) was launched on 8 April 2015 by the Prime Minister Shri Narendra Modi to provide loans at very low rates to people, mostly poor, to help them set up small business and manufacturing industries. Shri Narendra Modi’s focus is on to make people job creators and not job seekers, and providing loans at very low interest rates to start small-scale business and micro-industries is one of the most important steps taken to alleviate poverty and create jobs, thereby empowering the poor section of the society.

In the last 5 months, a sum of ₹42,000 crore has been disbursed under the MUDRA Yojana. The annual target for the Financial year 2016-17 is to disburse ₹1,80,000 crore. Due to good monsoon and festive season coming up, it is anticipated that more and more people will apply and get the loan. Since the time MUDRA Yojana was launched, ₹ 1,30,000 crore has been disbursed as loans to about 3.5 crore people. This has directly benefited 3.5 crore people to either establish a new small/micro enterprise or to develop the pre-existing one. It is estimated that the loans given to these 3.5 crore people have led to the creation of lakhs of jobs at this level. Out of the ₹ 1,30,000 crore sanctioned under the MUDRA Yojana, 35 % has been disbursed by MFIs (Micro Finance Institutions) and 20 % by State Bank of India alone.

Under Pradhanmantri MUDRA scheme, banks offer loans to people and non-corporate entities who want to establish and develop micro-scale and small enterprise involved in manufacturing, trading or services. The scheme has been divided into 3 categories –
1. Shishu (Loan upto  ₹ 50,000)
2. Kishor (Loan in the range of ₹ 50,000 – ₹ 5,00,000)
3. Tarun (Loan in the range of ₹ 5,00,000 – ₹ 10,00,000)
For example, a poor person wants to start a sweet shop, or a bakery or any manufacturing/retail business, the person is eligible for MUDRA loan at a very low interest rate. The salient feature of this scheme is that for the Shishu category, the banks don’t ask for many documents and guarantee, therefore easily available to the poorest of poor person interested to start a microscale business. This will not only improve the living standards of the person, but will also provide employment to a few other people who will be working in the shop.

This is one of the most important and immensely successful initiatives of Modi governmet to boost small and microscale industries, create jobs and fight poverty at the grassroot level. It is estimated that this will directly initiate/boost establishments of more than 10 crore people, and provide much needed jobs to crores of people. This is a crucial step to fight poverty and unemployment “Head on”.


Kshitij Mohan