PM SVANidhi scheme: Share of minority applicants and beneficiaries down

OBCs, too, saw big drop in applicant, beneficiary share

The share of minority community applicants and recipients has shrunk under a government scheme for providing loans to street vendors. The decline comes even as application approvals under the scheme hit a high in 2023-24.

Minorities include Muslims, Sikhs, Christians and others. The government launched the Prime Minister Street Vendor's Atma Nirbhar Nidhi (PM SVANidhi) in June 2020 to provide collateral free loans to eligible urban street vendors during the pandemic and has disbursed over Rs 10,000 crore. The micro credit scheme disburses loans in three installments subject to repayment of the previous loan amount. The first loan installment begins at Rs 10,000, the second at Rs 20,000 and the third at Rs 50,000. The scheme also incentivizes regular repayment and digital transactions.

There were about 2.9 million beneficiaries under the PM SVANidhi scheme in financial year 2023-24 (FY24) as per data that the government provided in response to an application filed under the Right to Information (RTI) Act filed by Business Standard with the Ministry of Housing and Urban Affairs. Vendors from the minority community constituted just 3.5 per cent (or about 100,000) of this total list of beneficiaries. In comparison, they accounted for over 10 per cent of the beneficiaries in FY21, the year the scheme started. The share of applications from the minority segment has also steadily come down from 9.4 per cent in 2020-21 to 4.3 per cent in 2023-24. 

Meanwhile, the share of beneficiaries under the general and scheduled caste and scheduled tribe (SC/ST) category have risen steadily each year and account for 34 per cent and 24 per cent respectively of all those enlisted under the scheme.  Those from the other backward caste (OBC), though accounting for a majority share of the number of beneficiaries per cent, too have seen their share decline from 47 per cent in FY 21 to 38.5 per cent in FY24

A question on the 'significant disparity in the number of loans granted to street vendors from minority communities' was asked in Parliament in February 2024. The government said that it is taking initiatives for increasing the number of beneficiaries including through periodic reviews and awareness programmes. 

Arbind Singh, National Coordinator, National Association of street vendors of India (NASVI) said that while the scheme was ‘well-conceived and well implemented’ the dip in minority share ‘could be a problem of targeting of the scheme.’

“Members of the minority community form a sizable part of the street vending community,” he added.

In fact, the scheme seems to have lost some traction before picking up again in 2023-24. About 2.1 million beneficiaries across categories were registered under the scheme in FY21, which declined to 870,929 in FY22 and then further to 534,132 in FY23 before rising to 2.9 million in FY24 as per the RTI reply.

Lekha Chakraborty, professor and chair at the National Institute of Public Finance and Policy said that the scheme is ‘prima facie a good model of microcredit as it is not based on collateral assets and interest free to a threshold accessible limit.’  “If the source of repayment of a good credit by the vendors who have taken it is not from their economic activity, but Ponzi finance by taking another credit from informal money lenders, then they are getting into perpetual debt. This fear of perpetual debt may be a reason for less takers,” she added.

Singh said that while the scheme has streamlined the process of money lending by the lenders it has not significantly dented the habit of money lending from informal lenders. “But vendors have become very aware now. They know that if they do not repay back their loans, their record (credit score) will get tarnished and it will be difficult to get a loan again.”

“The overall economic risks and uncertainties affect economic activity. If there is no scope for sustainable economic activity, the efficacy of mere credit infusion (by providing cheap credit) is partial. They fear repayment risks, if the business will not ensure them at least threshold returns,” said Chakraborty.

The ruling Bharatiya Janata Party has promised an expansion of the scheme in its 2024 election manifesto.

The proportion of loan applications sanctioned of the total eligible loan applications has exceeded 90 per cent across caste categories shows an analysis of the data from the RTI reply. 

The share of sanctioned applications as a proportion of eligible applications has risen to 96.1 per cent in 2023-24, compared to 75.2 per cent in 2020-21.

The sanction rates were the highest for the OBC category applicants at 98 per cent followed by 94 per cent for the SC/ST category and 93 per cent for the general category. The FY24 application approval rates for the minority category applicants show an anomaly where there are more sanctioned applications than eligible ones. The Ministry of Housing and Urban Affairs did not respond to an email requesting an explanation of this anomaly at the time of publication of the story.

Singh said “Loan acceptance is directly proportional to the amount of push given by the government. Only when the government pushes then the bankers go ahead with it. When the push weakens then the loan acceptance will also decline.”

Chakraborty said that changes would need to be seen with additional data including regional, socio-economic groups and gender details before conclusions can be drawn on the underlying trends. 

The Ministry has clarified earlier that the principal reasons for loan rejection include a history of loan defaults or inauthentic applicants.

Chakraborty notes that loan rejection rates could also reflect the “apprehension about mounting NPA (non-performing assets).”

Not all states have the same approval rates. Manipur has the lowest application approval rate at 59.7 per cent, followed by Rajasthan at 63.7 per cent, Nagaland at 64 per cent and Haryana at 66 per cent.