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Comparative Performance ofPradhan Mantri Mudra Yojana (PMMY)

in West Bengal and other select States in India

Bhaskar BiswasAssistant Professor of Commerce,

Raja Rammohun Roy Mahavidyalaya, Radhanagar, Hooghly, [email protected]

DoI: 10.23862/kiit-parikalpana/2019/v15/i1-2/190180

AbstractA part of income which is non disposable is saved. Saving and investment arerelated with each other. So, Income generation is an important thing in developingcountries like India. For generating income creation of employment opportunitiesand self employment is very important. Hence, role of micro f inance to provideloans for starting new business or small business cannot be neglected. It is seenthat most of the people who borrow loans are from unorganized sector. Financialinclusion through Pradhan Mantri Mudra Yojana (PMMY) would be instrumentalto bring economic change in the society. MUDRA is ‘Micro Unit Development andRef inance Agency’. This yojana is a reform measure taken by the Government ofIndia to boost up the f inancial condition of micro small and medium enterprises(MSME).The f inancial initiative taken in the form of MUDRA scheme will facilitatethe micro units and will be able to provide credits and funds to develop their smallbusinesses. However, initial stages showed signif icant interest but slowed withyears. The paper throws light on performance of Scheme in India and also bringsout the comparative performance of the Mudra Yojana in West Bengal with theother states like Tamil Nadu, Karnataka, Odisha and Uttarakhand for a period offour years from 2015-16 to 2018-19. The analysis of different categories of schemesis done through trend forecasting. The analysis concludes that people are gettingencouraged to develop entrepreneurship by taking initiative to start their own work.It reveals that performance of MUDRA yojana is successful under Kishor and TarunCategories whereas Shishu category has fallen.

Keywords: Investment, Financial inclusion, Entrepreneurship, Income generation,micro unit, Self employment.

Parikalpana - KIIT Journal of Management (Vol. 15, Dec. 2019)

Introduction

Pradhan Mantri Mudra Yojana (PMMY)is a scheme initiated by Government ofIndia to provide loans up to Rs. 10 lakhto non-corporate, non-farm small/

micro enterprises. Under PMMY, peopleinvolved in non-farm activities can availloans up to Rs. 10 lakh. The loans areoffered under Mudra scheme by PrivateSector Banks, Non-Banking Financial

Parikalpana - KIIT Journal of Management154

Companies (NBFCs), Micro FinanceInstitutions (MFIs), Public Sector Banks,Regional Rural Banks (RRBs), State andUrban Co-operative Banks and ForeignBanks.

The following are some of the keyfeatures and characteristics of thePradhan Mantri MUDRA Yojana:

Loan amount offered- The scheme hasthree categories under which loans aredisbursed:

• Shishu – For loan amount up to Rs.50,000

• Kishore –For loan amount from Rs.50,001- Rs 5 lakh

• Tarun – For loan amount more than5 lakhs and up to Rs 10 lakh

MUDRA Yojana has a bouquet of offers.The signif icant few include –

1. Micro Credit Scheme – Under thisscheme, f inancial support is extendedthrough Micro Financial Institutions(MFIs) so that they can give businessloans of up to Rs. 1 lakh. Typically themode of delivery of such loans couldinclude individuals engaged in specif icmicro enterprise activities, as wellvarious joint liability groups (JLGs) andself-help groups (SHGs).

2. Women Enterprise Programme(Mahila Uddyami Yojana) – Thisscheme is an important part and parcelof MUDRA Yojana targeted specif icallyat women entrepreneurs. It is designedto encourage individual womenentrepreneurs, women’s Joint LiabilityGroups and Self-Help Groups to set upvarious micro enterprises. Specialconcessions may be afforded in such

cases for example reduction in interestrates of up to 0.25% on loans granted.

3. Refinance scheme for Banks –MUDRA allows banks includingScheduled Co-operatives Banks,Regional Rural Banks and Commercialbanks to easily ref inance loan amounts(up to Rs 10 lakhs per unit). Therefinance facility is available only if thesebusiness loans have been given for microenterprise activities. Banks eligible foravailing the ref inance facility need tocomply with requirements that arenotif ied from time to time.

4. Mudra Card – MUDRA card is aninnovative credit product which makescredit easily accessible to small businesswhile providing flexibility to the cardowner. It can be used as a credit card withoverdraft (loan) limit and can also beused as a debit card with the facility ofATM withdrawals. The Mudra Card canbe used by businesses to obtain workingcapital under its unique cash-creditarrangement.

5. Credit Guarantee Fund – Alsoknown as the portfolio credit guarantee,this involves the creation and use of aspecial fund termed as the CreditGuarantee Fund for Micro Units (CGFMU).This fund is managed by the NationalCredit Guarantee Trustee Company Ltd.and allows eligible entities to receivemicro loans with ease.

6. Equipment Finance Scheme – Thisscheme as part of the MUDRA Loanscheme enables small entrepreneurs andmicro units to avail a loan to f inance thepurchase/upgrade of qualifyingequipment/machinery. This encourages

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the enterprises to improve theirproduction techniques to increaseoverall productivity and eff iciency oftheir business.

7. Credit to Micro Enterprises – Oneof the basic motives of MUDRA is tomaximise both the quantum of benefitsand the number of beneficiaries fromthe scheme. A large proportion of India’spopulation is currently involved inspecif ic sectors including but notlimited to land transport, foodproduction, textile production andcommunity services. To meet the growthrequirements of these sectors, varioustailor-made products and schemes wereand are being launched in order to helpmicro enterprises succeed and prosper.

Main objectives of giving MUDRAloan:

Mudra loan for business vendors andshop keepers:

In mudra loan the vendors and shopkeepers can get loan upto Rs. 50000 toRs. 1000000 for fulf illing his / herentrepreneurial, vending, non-farmingactivities.

Food production sector:

The entrepreneur dealing in coldstorages, tiffin services, food services canalso get MUDRA loan and use the loanfor increasing size of his businessoperations.

Textile industry:

The textile industry comprising ofapparel designing, fashion designing,khadi work, handloom sector can beeligible for such loan.

Agricultural activity:

Some agricultural activity like poultryfarming, dairy farming, f ishing,livestock rearing, improvements of longand short canals and wells are comeunder the preview of Pradhan MantriMUDRA Yojana.

Objectives of study:

1. To evaluate the PMMY in India.

2. To analyse the comparativeperformance of PMMY IN West Bengalwith other states like Tamil Nadu,Maharastra , Odisha and Uttarakhandfor a period of four years from 2015-16 to2018-19.

Scope of the study:

The study brings out the performanceof MUDRA Yojana In the state of WestBengal and also reveals the effort ofGovernment to make it more effective.It also throws light on the salientfeatures of the scheme that had helpedthe young educated and skilled peopleto come up for entrepreneurialactivities. The study will highlight theperformance of the product which mayhelp f inancial institutions to deviseprograms and products that are bettertailored to meet their requirementsconsidering the socio demographic,psychological and economicfactors.The study will be useful todevise new methods to reach the Thegovernment launched a Micro UnitsDevelopment and Ref inance Agency(MUDRA) Bank, responsible forregulating and ref inancing all Micro-f inance Institutions (MFI) whichprovide loans to micro/small business

Comparative Performance of PMMY in West Bengal and other select States in India


entities engaged in manufacturing,trading and services activities. It wasdecided that MUDRA will examine theprogress of PMMY. NABARD, TheNational Bank for Agriculture & RuralDevelopment (NABARD) was alsoadvised to closely monitor the progressof RRBs, as RRBs are under supervisorydomain of NABARD. According to theNSSO survey of 2013, there are 5.77crore small business units, mostlyindividual proprietorships, which runsmall manufacturing, trading orservices activities. Many of these ‘ownaccount enterprises’ are owned bypeople belonging to Scheduled Caste,Scheduled Tribe or Other BackwardClasses. whereas only 4% of such unitsget institutional f inance. Provision ofinstitutional f inance to such micro/small business units will allow them tobecome instrument of GDP growth andalso employment. Consequently, it wasalso decided that the MUDRA loansgiven by MFIs also needs to be capturedas most of the MFIs are MUDRApartners. Accordingly, MFIN was given

the responsibility for following up withthe NBFC- MFI and getting their dataon the portal. Similarly, Sa-Dhan wasmade responsible for collecting the dataand on boarding the same for the nonNBFC MFIs.

Research problem:

Though the government of India has aninitiative to boost up the f inancialcondition of the Indian micro small andmedium enterprises (MSME) byproviding the MUDRA loan throughMicro f inance institution, RegionalRural Bank , public sector banks andprivate sector banks but it has beenobserved that disbursement of loan areequally increasing all over the country.

Hypothesis:

H0: Loan disbursement in select states ofIndia including West Bengal has beenincreased during the period of study.

H1: Loan disbursement in select statesof India including West Bengal has notbeen increased during the period ofstudy.

Analysis and interpretation: Table 1: Performance of top states in India underthe Mudra Yojana as of March, 2018 based on number of sanctions*:

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The above table showed the state-wiseperformance of loan under MUDRAyojana during the year 2017-18. We cansee that number of sanctions of loan(5860165) is highest in Tamil Nadu, alsothe amount sanctioned and amountdisbursed are also highest in Tamil Naduduring the 2017-18. Though in thenumber of sanction (4967286) wassecond highest in west Bengal butKarnataka stands second in case ofamount sanctioned and amountdisbursed. Uttarakhand and Odishastands 15th and 14th in the amount of loansanctioned and amount of loandisbursed during the year 2018-19. UttarPradesh and Maharashtra stand thirdand fourth in the disbursement of loanunder MUDRA yojana. West Bengalranks f ifth in the amount of loandisbursement. We have considered WestBengal and two states which ranks first i.eTamil Nadu, ranks second i.e. Karnatakaand two states which stands fourteenthand f ifteenth in the amount of loandisbursementduring the year 2018-19.

It can be said from the above table 2 totable 5 that total disbursed amount ofTamil Nadu (crores 33807.87)in year

2018-19 has been increased from15496.86 crores in 2015-16 so the amountof loan disbursement has increased bymore than 2 times. Total disbursedamount of Karnataka (crores 29345.44)in year 2018-19 has been increased from16469.43 crores in 2015-16 so the amountof loan disbursement has increased byalmost 2 times. In case of West Bengaltotal disbursed amount (crores25892.99) in year 2018-19 has beenincreased from 7740.41crores in 2015-16so the amount of loan disbursement hasincreased by almost 3.5 times. In case ofOdisha total disbursed amount (crores15284.62) in year 2018-19 has beenincreased from 5436.26 crores in 2015-16 so the amount of loan disbursementhas increased by almost 3 times.In caseof Uttarakhand total disbursed amount(crores 2844.74) in year 2018-19 has beenincreased from 1745.08 crores in 2015-16.Sothe amount of loan disbursement hasincreased by almost 1.5 times.The totalsanctioned amount in case of TamilNadu (crores 34260.05) in year 2018-19 has been increased from 15846.14crores in 2015-16 so the amount of loansanctioned has increased by almost2.25 times. The total sanctioned

*State wise data is as provided on the Mudra.org.in website.



amount in case of Karnataka (crores29995.35) in year 2018-19 has beenincreased from 16861.35 crores in 2015-16 so the amount of loan sanctionedhas increased by almost 2 times. Thetotal sanctioned amount in case ofWest Bengal (crores 26462.13) in year2018-19 has been increased from8033.88crores in 2015-16 so the amountof loan sanctioned has increased byalmost 3.25 times. The totalsanctioned amount in case of Odisha(crores 15770.28) in year 2018-19 hasbeen increased from 5694.86 crores in2015-16 so the amount of loansanctioned has increased by almost2.75 times. The total sanctionedamount in case of Uttarakhand(crores 2973.72) in year 2018-19 hasbeen increased from 1788.39 crores in2015-16 so the amount of loansanctioned has increased by almost1.66 times. In case of West Bengaltotalnumber of sanctiones (crores5856048) in year 2018-19 has beenincreased from 2628548crores in 2015-16 so the total number of loansanctiones has increased by 2 times.In case of Odisha total number of loansanctiones (crores 4164432) in year2018-19 has been increasedfrom2343261crores in 2015-16 so thetotal number of loan sanctiones hasincreased by 2 times. In Tamil Naduamount disbursed in Sishu category ofloan under mudra yojna has beenincreased from 8231.68crores in 2015-16 to 18597.62 crores in 2018-19.so it hasbeen almost by 2.25 times.InKarnataka amount disbursed in Sishucategory of loan under mudra yojnahas been increased from 9071.71crores

in 2015-16 to 13428.73 crores in 2018-19.so it has been almost by 1.5 times.InWest Bengal amount disbursed inSishu category of loan under mudrayojna has been increased from 4860.80crores in 2015-16 to 14441 crores in2018-19. In Odisha amount disbursedin Sishu category of loan under mudrayojna has been increased from 3753.86crores in 2015-16 to 10304.72 crores in2018-19.so it has been almost by 2.5times.In Uttarakhand amountdisbursed in Sishu category of loanunder mudra yojna has been decreasedfrom 688.99 crores in 2015-16 to 618.09crores in 2018-19. In West Bengalamount disbursed in kishor categoryof laon under mudra yojna has beenincreased from 2201.84 crores in 2015-16 to 8208.19 crores in 2018-19. In WestBengal amount disbursed in Taruncategory of loan under mudra yojnahas been increased from 1451.77croresin 2015-16 to 3242.091crores in 2018-19.

In the next section of the analysis partgraphical representation of totalamount disbursed, to tarun, kishorand sishu has been presented todiscuss the topic of my study more andmore specif ically and clearly. The chartis shown the amount disbursed underPMMY in Tamil Nadu, Karnataka,West Bengal, Odisha and uttarakhandfrom year 2015-16 to year 2018-19.

Inference f ig 1: In case of Tamil Naduthere was a sharp rise of total amountof loan disbursed in MDURA loanfrom year 2016-2017 to 2017-2018 and2018-2019. In case of Karnataka therewas a sharp rise of total amount of loandisbursed in MDURA loan from year

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2016-2017 to 2017-2018 and 2018-2019.In case of West Bengal there wasa sharp rise of total amount of loandisbursed in MDURA loan from year2015-2016 to 2018-2019 every year.Incase of Odisha there was a rise of totalamount of loan disbursed in MDURAloan from year 2016-2017 to 2017-2018and 2018-2019.In case of Uttarakhandtotal amount of loan disbursed inMDURA loan from year 2016-2017 to2018-2019 was negligible.

Inference f ig 2: In case of Tamil Naduthere was a sharp rise of total amountof loan disbursed in MDURA loan in‘Tarun’ from year 2016-2017 to 2018-2019 and fall from year 2015-16 to 2016-17. In case of Karnataka there was asharp rise of total amount of loandisbursed in MDURA loan in ‘Tarun’from year 2015-16 to 2018-19.In case ofWest Bengal there was a sharp rise oftotal amount of loan disbursed inMDURA loan in ‘Tarun’ from year2015-2016 to 2018-2019 every year.Incase of Odisha there was a rise of totalamount of loan disbursed in MDURAloan in ‘Tarun’ from year 2016-2017 to2017-2018 and 2018-2019.In case ofUttarakhand total amount of loandisbursed in MDURA loan ‘Tarun’from year 2015-16 to 2018-19 wasnegligible.

Inference f ig 3: In case of Tamil Naduthere was a sharp rise of total amountof loan disbursed in MDURA loan in‘Kishor’ from year 2016-2017 to 2018-

2019 and remain same from year 2015-16 to 2016-17. In case of Karnatakathere was a sharp rise of total amountof loan disbursed in MDURA loan in‘Kishor’from year 2015-16 to 2018-19.Incase of West Bengal there was a sharprise of total amount of loan disbursedin MDURA loan in ‘Kishor’ from year2015-2016 to 2018-2019 every year.Incase of Odisha there was a rise of totalamount of loan disbursed in MDURAloan in ‘Kishor’ from year 2016-2017 to2017-2018 and 2018-2019.In case ofUttarakhand amount of loandisbursed in MDURA loan ‘Kishor’from year 2015-16 to 2018-19 wasnegligible.

Inference f ig 4: In case of Tamil Naduthere was a sharp rise of total amountof loan disbursed in MDURA loan in‘sishu’ from year 2015-2016 to 2018-2019. In case of Karnataka there was asharp rise of total amount of loandisbursed in MDURA loan in ‘sishu’from year 2016-17 to 2018-19 anddecline from year 2015-16 to 2016-17 .Incase of West Bengal there was a sharprise of total amount of loan disbursedin MDURA loan in ‘sishu’ from year2015-2016 to 2018-2019 every year.Incase of Odisha there was a rise of totalamount of loan disbursed in MDURAloan in ‘sishu’ from year 2016-2017 to2017-2018 and 2018-2019. In case ofUttarakhand amount of loan disbursedin MDURA loan ‘sishu’ from year 2015-16 to 2018-19 was remain f lat.



Fig 1: Total amount disbursed under PMMY in Tamil Nadu, Karnataka,West Bengal,Odisha and Uttarakhand from year 2015-16 to 2018-19 .

Fig 2: Total amount disbursed to “Tarun” under PMMY Tamil Nadu, Karnataka, West Bengal,Odisha and Uttarakhand from year 2015-16 to 2018-19

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Fig 3: Total amount disbursed to “kishor” under PMMY in Tamil Nadu, Karnataka,West Bengal,Odisha and Uttarakhand from year 2015-16 to 2018-19

Fig 4: Total amount disbursed to “Sishu” under PMMY in Tamil Nadu, Karnataka,West Bengal,Odisha and Uttarakhand from year 2015-16 to 2018-19



Tabl

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Tabl

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163Ta

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- 4

Tabl

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Conclusion:

It can be conclude from the abovediscussion, analysis and interpretationthat we have found that the nullhypothesis of my study which wasdisbursement of MUDRA loan has beenincreased in West Bengal and otherselected states in India over the periodof study and it is accepted andalternative hypothesis is rejected. Wecan say that total disbursed amount ofloan in Tamil Nadu, Karnataka and WestBengal has been increased sharplyduring the period of study. In Odishathere is a marginal increase and inUttarakhand thetotal disbursed amountof loan during the period of study almostremain the same. So it can be said theloan sanctioned in all sphere has beenincreased. The amount of total loansanctioned in ‘Sishu’ category has beenincreased by 2.22 times during theperiod. There has been a 2.40 timesincrease in the amount of total loansanctioned in ‘Kishore’ category Theamount of total loan sanctioned in‘Tarun’ category has been increased by2.30 times during the period. Theamount of total loan sanctioned in‘Kishore’ category in West Bengal hasbeen sharply jumped from Rs. 2201.84crores to Rs. 8400.52 crores during theperiod of study.The amount of total loansanctioned in ‘Kishore’ category inUttarakhand has been increased fromRs. 632.07 crores to Rs. 1213.62 croresduring the period of study.Governmentshould take the initiatives to encourageyoung and educated entrepreneurswhich will be a useful tool in Jobcreation. It not only meant to provide

employment opportunities but alsoplays a vital role in womenempowerment. It helps the women tobecome self reliant and help theunderprivileged class to self employed.Therefore Mudra Yojana should beimplemented effectively in all the states.In this context f inancial awareness andfinancial literacy programmes should beconducted regularly and should reachthe ground level. However, the initiaveunder PPMY is indeed a game changer.

Limitations:

1. The study is limited only for fouryears.

2. The study has taken only f ive statesviz., Tamil Nadu, Karnataka,WestBengal,Odisha and uttarakhand andmore state may be discussed.

REFERENCES

Agarwal, M., & Dwivedi, R. (2017). PradhanMantri Mudra Yojna: a CriticalReview. Parikalpana: KIIT Journal ofManagement,13(2), 97-106.

Godha, A., & Nama, D. (2017). PradhanMantri Mudra Yojana: A NewFinancial Inclusion Initiative.International Journal of EngineeringTechnology, Management, andApplied Sciences,5(3), 200-204.

John, J. S., Kabra, N., & Jose, S. M. (2018).MUDRA Performance in Karnataka.

Mahajan, A. (2018). An analysis ofperformance and impac.ResearchJournal of Management, 7(3), 1-5.

Mathew, J., & Kurian, R. (2017). India’spolicies on leveraging f inancialinclusion in the country. The Journalof Developing Areas, 51(4), 433-443.

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Roy, A. K. (2016). Mudra Yojana-A Strategictool for Small BusinessFinancing. International Jopurnal ofAdvance Research in ComputerScience and ManagementStudies, 4(1), 68-72.

Tiwari, M. D. (2019). Role of Pradhan MantriMudra Yojna (PMMY) in Promotionof Financial Inclusion In MadhyaPradesh. Journal Current Science, 20(02).

Shahid, M., & Irshad, M. (2016). a DescriptiveStudy on Pradhan Manthri MudraYojana (Pmmy). International Journalof Latest Trends in Engineering andTechnology Special Issue, 121-125.

Seema, I. X. (2015). MUDRA: Micro UnitsDevelopment & Ref inance Agency.International Journal in Commerce, IT& Social Sciences, 2(10), 23.

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