Narendra Modi's MUDRA scheme fails to attract women seeking loans for small business despite incentives

By Vivek

Despite a discount on the interest rates women pay, loans sanctioned to them under a national programme meant to encourage "micro" businesses fell by 5.8 percentage points in 2016-17 since the scheme's launch in 2015-16, according to government data, although three in four loans sanctioned over three years were to women.

MUDRA yet to appeal women. Reuters

MUDRA yet to appeal women. Reuters

Loans to women fell to 29 million or 73 percent of the 39.7 million total loans sanctioned under the Pradhan Mantri MUDRA–acronym for Micro Units Development and Refinance Agency–Yojana (Prime Minister’s Mudra Scheme) in 2016-17 from 27.6 million or 79 percent of 35 million in 2015-16, according to a reply by Finance Minister Arun Jaitley to the Lok Sabha on 5 January, 2018.

Encouraging women to start small businesses is one of the goals of the programme: The government gives a discount of 25 basis points (a basis point is a hundredth of a percent) on the interest charged on loans to women under the Women Enterprise Programme. A "micro" unit is one that has invested less than Rs 25 lakh in plant and machinery or Rs 10 lakh in equipment, according to a government definition.

Source: Lok Sabha reply, Mudra portal accessed on 5 February, 2018

Source: Lok Sabha reply, Mudra portal accessed on 5 February, 2018

The latest data are relevant because over 24 years to 2013, female labour force participation in India fell from 35 percent to 27 percent, IndiaSpend reported on 5 August, 2017. Only Saudi Arabia was worse than India among G-20 countries, in South Asia, only Pakistan was.

Cumulatively since 2015-16, 75.5 million loans had been sanctioned to women as of 22 December, 2017, Jaitley said. In the first two years, of the 74.6 million loans sanctioned under Mudra, 56.77 million or 76 percent were to women.

As of 26 January, 2018, 106 million loans had been sanctioned under the scheme, according to data on the Mudra portal on 5 February, 2018.


Per 1,000 women, Puducherry had sanctioned the highest number of loans at 368 between 2015-16 and 2017-18 (till 22 December), followed by Odisha (319) and Karnataka (289), according to a IndiaSpend analysis.

The India average over the three years (till 22 December, 2017) was 125 loans per 1,000 women.

Arunachal Pradesh was the worst at three loans per 1,000 women between 2015-16 and 2017-18 (till 22 December), followed by Daman and Diu (7) and Jammu and Kashmir (8).

Of 36 states and Union Territories, 10 had sanctioned more than the national average of 125 and 14 more than 100 loans per 1,000 women between 2015-16 and 2017-18 (till 22 December).


Source: Lok Sabha reply, Census 2011, Telangana Statistical Year Book 2017. Figures till 22 December, 2018.

For dataset of all states, click here

The author is an analyst with IndiaSpend.

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Updated Date: Feb 21, 2018 21:00:38 IST

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