How Amit Shah is Faking MUDRA Scheme Numbers to Show Employment

BJP National President, Amit Shah has claimed that 7.28 crore people have become self-employed under the Centre’s Mudra loan scheme in the last 3 years. This is far from true. Shadow Govt India Fact Checks and find that it is another Jumla!

Background of MUDRA Scheme

BJP Government launched MUDRA in 2015-16. Roles and responsibilities are described in GOI Press Release of April 8, 2015 (Copy below). According to the same, essential role of MUDRA is to refinance MFI’s & Banks for Micro & Small loans. PIB Press Release also states that Government committed a sum of Rs 20,000 Cr out of priority sector lending shortfalls for MUDRA and Rs 3000 Cr in addition thereto, i.e. a total of Rs 23,000 Cr.

The budgetary allocation of PM MUDRA Yojana for 2016-17 was Rs 2,135 Cr which has been reduced in 2017-18 to just Rs 1,040 Cr. Yet the Finance Minister, ShriArunJaitley in his 2017 Budget Speech claimed that a total of 2.24 Lakh Crore would be distributed for Micro & Small units through MUDRA.Remaining lending is part of the business commitments of the Banks and MFI’s. Hence, MUDRA is merely a collation of these figures as the limited refinance provided by it. Refinancing provided by Banks in FY 16 was a mere Rs 3,000 Cr and to MFI’s a mere Rs 616 Cr. (Around Rs 3000 Crore)

Separately, Amit Shah has claimed that these small entrepreneurs received loans worth more than Rs. 3.17 lakh crore. MUDRA offers loans starting at Rs. 50,000 and capped at Rs. 10 lakhs.

Since the past 20 years, Banks as also MFI’s have always lent to Micro & Small enterprises. Hence, MUDRA is merely a collation of these figures as the limited refinance provided by it

5 Facts that Busts BJP Government’s Claims 

1. JijiMammen, the CEO of MUDRA, admitted that loans to the micro sector by banks and MFIs is not new, but that MUDRA’s refinance facility is behind the rise in lending.JijiMammen also is on record said he does not have any clarity or specific number on how many jobs MUDRA has created. This severely punctures Amit Shah’s claims!

2. Finance Minister, Arun Jaitley misled the Parliament in his Budget Speech of 2017-18 where he deliberately quoted old figures and targets of the scheme. The fact that MUDRA Scheme had missed its target by 50% did not figure in Jaitley’s speech. Instead Paragraph 109 of his speech states “The PradhanMantri Mudra Yojana has contributed significantly to funding the unfunded and the underfunded. Last year, the target of 1.22 lakh crores was exceeded,” The truth is that the target-exceeding figures quoted by Jaitley in the Budget speech correspond to the preceding financial year of 2015-16 when loans worth Rs 1.33 lakh crore were disbursed.

3. There is actually negligible ‘refinancing’ as promised by the MUDRA Scheme. Out of the Rs2.5 lakh crore loans disbursed so far by banks and non-banks, the refinancing is less than Rs5,500 crore. The huge Mudra targets are being met because of loans handed out by banks.

4. A MicroSave report from 2016 says: “Both banks and NBFC-MFIs have built huge MUDRA loan portfolio, but only a small part of these loans appear to be ‘new MUDRA loans’, extended to ‘first-time borrowers’ i.e., financially excluded.” It also states that “Banks perceive MUDRA loans as high risk and low value, requiring extremely high involvement from staff. Therefore, banks have been extremely conservative in extending MUDRA loans”

5. This year the Government could only cover 62% disbursements. The share of small and microloans in total credit to industry has reduced to 12.55% this year (FY17) from 13.33% in FY15. This speaks volumes of how the MUDRA Scheme has completely failed.