Evaluating the Effectiveness of Pradhan Mantri Mudra Yojana in Promoting Financial Inclusion in India
Author : Poonam S Raibagi and Zackriya Mohammed
Abstract :
The Indian government's major purpose with the Pradhan Mantri Mudra Yojana (PMMY), which launched in 2015, is to help small and informal company owners access loans without having to put up collateral. This study looks at how PMMY has influenced Karnataka, focusing on how beneficiaries spend the money and if the program is accomplishing its goals of making money more accessible and boosting entrepreneurship.
We employed a mixed-methods approach that integrated quantitative data from 100 verified PMMY beneficiaries in different regions of Karnataka with qualitative insights from reviews of literature and policy. The dataset includes information on loan sorts (Shishu, Kishore, Tarun), sanctioned amounts, business categories, locations, and lending institutions. A conceptual framework based on financial inclusion helps figure out the link between giving out loans, using them, and results like business growth and involvement in the economy.
Findings reveal that over 60% of applicants acquired Shishu loans, often using them to start micro-enterprises in sectors like retail, tailoring, beauty services, and food vending. Moreover, half of them utilized the money to build new firms, and a third of them used it to grow existing ones. This shows that PMMY has been successful in encouraging people to start their own enterprises. The survey also demonstrates that firms can't stay open for long as there aren't enough resources to aid them, like skills training, digital tools, and access to markets.
This study is different because it leverages data from major recipients to look at real-world results instead than just national trends or overall metrics. It gives policymakers and banks vital information on how to better align PMMY's implementation with its goals. The study underscores the requirement of coupling financial access with developmental support to ensure long-term success for micro and small companies.
Keywords :
PMMY, loans, economy etc.
