The Narendra Modi government has claimed that its flagship Mudra loan scheme is generating employment. But, data shows a miniscule number of Mudra loans generate a return that satisfies even the minimum wage requirement.
* The Modi-led govt has been showcasing the Mudra loan scheme to claim that millions of jobs are being created
* There is no official data available on the number of jobs created due to the Mudra loan scheme
* An examination reveals that only 3% of Mudra loans can generate a return, or income, that satisfies the minimum wage requirement
Confronted with widespread criticism of growing unemployment and jobless growth, the Narendra Modi-led central government has been showcasing the Mudra loan scheme to claim that millions of jobs are being created. No less than Prime Minister Narendra Modi himself declared in his address to the nation last Independence Day that Mudra loans had been given to 130 million people, of which 40 million were first timers. He had said that the "the initiative has helped multiply jobs".
Closer examination of Mudra, however, presents a different picture.
There is no official data available on the number of jobs created due to the Mudra loan scheme. However, an examination of the type and number of loans given out reveals that only three per cent of Mudra loans generate a return, or income, that satisfies the minimum wage requirement.
The examination also reveals that credit flow to the MSMEs (medium, small and micro enterprises)-the primary objective of Mudra scheme- remains below par.
Not just that, a significant chunk of Mudra funds (about 40 per cent) remains idle. Worse, economists and bankers, including former RBI Governor Raghuram Rajan, have warned that Mudra loans could be the source of the next non-performing assets (NPA) crisis.
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