Why is it in the News?

A study that evaluated the impact of the PM SVANidhi, a small working capital loan scheme for street vendors, has found that the first tranche of `10,000 led to an additional annual income of `23,460 for each beneficiary.

News Summary:

• Commissioned by the Union Ministry of Housing and Urban Affairs, the study was conducted by the Centre for Analytical Finance at the Indian School of Business (ISB) from January to June 2023.
• Although the report's findings will inform the Ministry's assessment of the PM SVANidhi scheme, it is not expected to be publicly released.

Key Findings of the Report:

• 94% of beneficiaries who received the initial Rs 10,000 loan reported using it for business investments, rising to 98% for those who received a second loan.
• The first loan contributed to an average additional monthly income of Rs 1,955, totalling Rs 23,460 over the one-year loan period.
• Approximately 13.9% of disbursed loans were categorized as non-performing assets (NPAs), indicating no payments for three months or more.
• Beneficiaries demonstrated a lower debt-to-income (DTI) ratio compared to typical small businesses, indicating high creditworthiness.
• Despite the PM SVANidhi program, there was limited improvement in street vendors accessing formal credit from other sources, with only 9% having loans from financial institutions.

What is PM SVANidhi?

• The Prime Minister Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) stands as a flagship initiative of the Ministry of Housing and Urban Affairs, Government of India, launched on June 1, 2020.
• Its core aim is to extend accessible credit to street vendors, enabling them to revive their businesses and achieve self-reliance.
• The scheme is specifically tailored to empower street vendors, including hawkers, rehri walas, thelewala, and those operating in urban and peri-urban areas.
• PM SVANidhi facilitates eligible street vendors to obtain working capital loans devoid of collateral requirements.
  • These loans, with a maximum cap of Rs. 10,000 and a one-year tenure, are intended to support vendors in procuring essential items, securing raw materials, and meeting their operational expenses.
• Furthermore, the scheme offers a 7% interest subsidy to vendors who repay their loans promptly, promoting timely repayments and fostering financial discipline.

How Does PM SVANidhi Work?

• The PM SVANidhi scheme operates through a streamlined and accessible application process designed to maximize participation and outreach among street vendors.
• Vendors can apply for the scheme via a dedicated online portal or through Common Service Centers (CSCs) established nationwide.
• Once the application is submitted, it undergoes a brief verification process conducted by relevant authorities.
  • Upon successful verification, the loan amount is directly transferred to the vendor's bank account.
  • Vendors can then utilize the funds to revive their businesses, purchase inventory, and cover operational expenses.

Key Features and Benefits of PM SVANidhi:

• Affordable Credit: PM SVANidhi offers accessible working capital loans of up to Rs. 10,000 to street vendors, facilitating credit access without the need for collateral.
• Interest Subsidy: The scheme provides a 7% interest subsidy to vendors who repay their loans promptly, incentivizing timely repayments and easing financial burdens.
• Digital Empowerment: PM SVANidhi promotes digital transactions and payments among street vendors, fostering adaptation to evolving business practices and enhancing financial literacy.
• Enhanced Livelihood: By availing of PM SVANidhi benefits, street vendors can improve their livelihoods, expand their businesses, and generate sustainable income for themselves and their families.
• Access to Social Security Schemes: Street vendors enrolled in PM SVANidhi are eligible for various social security schemes, including Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), providing financial coverage and protection during unforeseen events.

Conclusion

The Prime Minister Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) scheme stands as a beacon of hope for street vendors throughout India. By offering accessible credit, digital empowerment, and access to social security schemes, PM SVANidhi is propelling the advancement and prosperity of street vendors, empowering them to establish sustainable livelihoods. This groundbreaking initiative, with its manifold advantages and inspiring success stories, underscores the Government of India's dedication to fostering an inclusive and self-sufficient economy.