Micro, Small and Medium Enterprises (MSMEs) in India
MSMEs are crucial to the Indian economy, contributing approximately 30.1% to the country’s gross value added (GVA) in 2022-23 and accounting for 45.79% of India's total exports in 2024-25.
Challenges and Changes in Credit Flow
- Historically, MSMEs faced challenges in obtaining credit from the formal financial system.
- The introduction of technology and government initiatives, like the Pradhan Mantri Mudra Yojana (PMMY), has improved credit accessibility.
Pradhan Mantri Mudra Yojana (PMMY)
- PMMY aims to promote entrepreneurship and self-employment, benefiting primarily first-generation entrepreneurs.
- By FY24, disbursements under PMMY reached ₹5.32 trillion, with a disbursement rate of 98% by end-February 2025.
- The scheme categorizes loans into Shishu (up to ₹50,000), Kishore (₹50,001–5 lakh), and Tarun (₹5 lakh one thousand–10 lakh), with a new Tarun Plus category for ₹10-20 lakh loans.
Key Features of PMMY
- Emphasizes cash flow-based lending instead of security-based lending.
- Integration with the Udyam Mitra portal for online credit applications.
- Approximately 520 million MUDRA loans totaling ₹33.19 trillion have been disbursed under PMMY.
Social Impact of PMMY
- Aimed at supporting weaker sections: SC, ST, and OBCs form about 50% of beneficiaries.
- Women are a key target segment, with 69% of accounts belonging to women.
- Inclusivity efforts have resulted in ₹5.7 crore MUDRA loans for minority communities.
State Bank of India's Role and Innovations
- SBI has financed over 17.2 million MUDRA loans, totaling over ₹3 trillion, driving economic growth.
- Launched MUDRA-BRE, a digital credit decisioning model, enhancing efficiency in loan processing.
Conclusion
MUDRA supports the vision of Viksit Bharat, empowering entrepreneurial growth across diverse sectors and regions. As the initiative marks a decade, it is essential to integrate learnings to enhance its effectiveness in meeting the aspirations of India.
