PM SVANidhi launched to provide affordable loans to street vendors amid COVID-19 crisis

New Delhi: The Union Cabinet, chaired by Prime Minister Narendra Modi, on Monday (May June 1), decided to launch a special micro-credit facility scheme 'PM SVANidhi' for providing affordable loans to the street vendors, said an official statement. The scheme is expected to go a long way in enabling street vendors to resume work and earn livelihoods in the wake of COVID-19 crisis. 

The Special Micro-Credit Facility Scheme - PM SVANidhi- PM Street  Vendor's AtmaNirbharNidhi, launched by the Ministry of Housing and Urban Affairs to provide affordable loans to street vendors. 

"Over 50 lakh people, including vendors, hawkers, thelewalas, rehriwala, theliphadwala etc. in different areas/ contexts are likely to benefit from this scheme," the statement said. The goods supplied by them range from vegetables, fruits, ready-to-eat street foods, tea, pakodas, breads, eggs, textiles, apparel, footwear, artisan products, books/ stationaries etc. The services include barber shops, cobblers, pan shops, laundry services etc. 

The government is stated to be sensitive towards the problems they have faced in the wake of the COVID-19 crisis. In such a time, there is an urgent need to provide affordable credit to them to ensure their business gets a boost. 

Urban local bodies will play a pivotal role in the implementation of the scheme, which is special due to a number of reasons: 

1- Historic first: This is for the first time in India’s history that street vendors from peri-urban/ rural areas have become beneficiaries of an urban livelihood programme. 

The vendors can avail of a working capital loan of up to Rs. 10,000, which is repayable in monthly installments in the tenure of one year. On timely/ early repayment of the loan, an interest subsidy @ 7% per annum will be credited to the bank accounts of beneficiaries through Direct Benefit Transfer on a six-monthly basis. There will be no penalty on the early repayment of loan.

The scheme provides for escalation of the credit limit on timely/ early repayment of loans to help the vendor achieve his ambition of going up on the economic ladder. It is for the first time that MFIs/ NBFCs/ SHG Banks have been allowed in a scheme for the urban poor due to their ground-level presence and proximity to the urban poor including the street vendors.

2- Harnessing technology for empowerment: In line with the government’s vision of leveraging technology to ensure effective delivery and transparency, a digital platform with web portal/ mobile app is being developed to administer the scheme with an end-to-end solution. The IT platform will also help in integrating the vendors into the formal financial system. This platform will integrate the web portal/ mobile app with UdyamiMitra portal of SIDBI for credit management and PAiSA portal of MoHUA to administer interest subsidy automatically.

3- Encouraging digital transactions: The scheme incentivises digital transactions by the street vendors through monthly cashback.

4- Focus on capacity building: MoHUA in collaboration with State Governments, State Missions of DAY-NULM, ULBs, SIDBI, CGTMSE, NPCI and Digital Payment Aggregators will also launch a capacity building and financial literacy programme of all the stakeholders and IEC activities throughout the country during the month of June and loaning will commence in the month of July.
 
The Cabinet meeting also decided to revise the definition of Micro, small and Medium Enterprises (MSME) for the first time after 14 years, as this sector has been silently operating in different areas across the country.

In the aftermath of the COVID-19 pandemic, PM Modi has recognises the role of MSMEs in building the nation, as the MSMEs formed a very prominent part of the announcements made under the Atmanirbhar Bharat Abhiyaan.