“Assessing the Impact of the MUDRA Scheme on employment generation, sustainable employment in India’s National Capital Region: A Mixed-Methods Analysis towards Aatmnirbhar Bharat@2047”

                                                                                  Shri Subhash Chandra

Abstract:

This research critically evaluates the influence of the Micro Units Development and Refinance Agency (MUDRA) Scheme on employment generation and the promotion of sustainable employment practices. Employing a mixed-methods approach that integrates quantitative analysis and qualitative insights garnered from interviews and surveys, the study investigates the extent to which the MUDRA Scheme has contributed to job creation and the establishment of sustainable employment opportunities among micro and small enterprises (MSEs).

The analysis underscores MUDRA’s pivotal role in fostering entrepreneurship and enhancing access to formal credit and financial services for historically marginalized segments of society, including small entrepreneurs, self-employed individuals, and residents of rural and semi-urban areas. By facilitating affordable credit, MUDRA empowers MSEs to initiate, expand, and modernize their operations, thereby indirectly catalyzing employment growth across diverse sectors.

However, the study identifies several challenges associated with the MUDRA Scheme, including the potential for over-indebtedness among borrowers, limited credit accessibility for specific segments, and operational inefficiencies within lending institutions. Moreover, while MUDRA loans offer competitive interest rates, opportunities exist to enhance their accessibility and affordability, particularly for MSEs operating in specialized or niche sectors.

Despite these challenges, the research acknowledges the significant contribution of the MUDRA Scheme to employment generation and the promotion of sustainable employment practices. It emphasizes the importance of addressing identified challenges and expanding the reach of MUDRA to further strengthen MSEs’ role in fostering sustainable employment opportunities and driving economic growth in the region. Additionally, it underscores the necessity for continued government support and policy interventions to maximize the socio-economic benefits of the MUDRA Scheme for all stakeholders involved.

Key Words:

MUDRA Scheme, Employment Generation, Sustainable Employment, Mixed-Methods Analysis

Introduction

Given the volume, scope and mixture of the country, it is necessary to know that the industrial sector contributes to India’s economic development and attempt to make that progress inclusive. Since independence, in order to encourage industrialization-driven economic growth at all levels; has been agenda of every government and accordingly they had created different plans and programmes to achieve their goal. The Ministry of Micro, Small and Medium Enterprises in India is well-known and that has divided small and medium enterprises based on their size and investment in the Micro, Small and Medium Enterprises Development Act, 2006. This division is based on the categories of businesses—manufacturing and service businesses— performed by the enterprise. Manufacturing enterprises consist of all those business activities that are engaged in the manufacture or production of goods specified in the first schedule of the Industries (Development and Regulation) Act, 1951. Similar to this, service enterprises are companies that carry out operations, including giving or supplying services to another company or a private individual.

As per latest amendment on MSME Classification and Criteria in 2024, it would be based on Turnover and Investments as given below:

A medium enterprise is defined as an enterprise having an investment in plant and machinery or equipment that is less than 50 Crore rupees. The turnover does not go over two hundred and fifty crore rupees. A medium enterprise can likewise be engaged in manufacturing, services, or trading activities.

The investment and turnover figures were changed to larger values, thereby resulting in a larger number of medium-sized enterprises (1)

With such a categorical classification of the micro-, small- and medium-sized enterprises (MSMEs) in India, these enterprises are playing a very vital role in the growth of our economy. The expansion of the Indian economy’s social and economic sectors is greatly influenced by the MSMEs. They provide significant contributions to the nation’s exports, employment and industrial production. For the country to move towards a quicker and more equitable growth, this sector is crucial.

Role of MSMEs in the Indian Economy

MSME are widely scattered around the country and produce a diverse variety of goods and services to meet the demands of regional, national and international value chains as well as local and worldwide markets. The huge industries that are active in the economy and making significant contributions to the socio-economic advancement of the nation are complemented by the MSMEs. Averaging 3.6 crore MSME units, there are over 8 crore people who have jobs because of them. MSMEs provide almost 22% of the nation’s gross domestic product (GDP), 45% of industrial output and 40% of exports.

The MSME sector has established to be a highly dynamic contributor in the forecasting of the Indian economy. There is variety of products for both domestic as well as international markets that MSMEs produce and manufacture and they have not only significant say on Industrial growth and development of various product segments but also an essential role in providing employment opportunities in underprivileged areas (2)

Government has made an announcement towards achieving of Atma-nirbhar Bharat goal (Abhiyaan) that promises -Rs 3 lakh crore collateral free automatic loans for MSMEs, Rs 50,000 crore equity infusion through MSME Fund of Funds, Rs 20 crore subordinate debt for MSMEs (3)

MUDRA Journey on PMEGP:

In light of the crucial role MSMEs play in the growth of any economy, this article makes an effort to investigate the situation of micro-, small- and medium-sized businesses in India. The study also examines how micro-, small- and medium-sized businesses might contribute to inclusive growth. The article would try to end by bringing attention to the problems, difficulties and possibilities that MSMEs in India are facing.

Review of Literature

 MSME stands for Micro, Small, and Medium Enterprises. It was introduced by the Government of India in agreement with the MSMED (Micro, Small, and Medium Enterprises Development) Act of 2006. As per this act, MSMEs are the enterprises involved in the processing, production, and preservation of goods and commodities (4)

MSMEs are broadly classified as manufacturing businesses and service businesses. As per the Ministry of MSMEs, ‘all business activities – services and manufacturing- are covered in the MSME sector’ as long as they meet the investment and turnover criteria mentioned in the above section (5) ibid.

SIDBI has adopted a Approach that propagated institutions building by way of formation of a network of strong subsidiaries that have become instrumental in realizing the inclusive growth targets creating value and building a supportive financial infrastructure for the growth and development of the MSME sector in the country (6)

.These subsidiaries have wide reach to enable them addressing both conventional and unconventional needs of MSMEs and start-ups at different growth curves (7) ibid

(Soni, 2016)⁸The research paper is an effort to understand the MUDRA: Development of Micro Units and refinancing agency. The main objective of this paper is to understand the Mudra scheme as it examine the Government’s recommended solutions for the successful completion of this project. The author eventually concluded that the MUDRA would create new confidence in small-scale enterprises and encourage young, educated, or skilled people to scale up their operations

(Ramesh, 2016)⁹ He studied MUDRA Schemes with the objective of study the Bank performance and found that performance of Shishu scheme was better and it also stressed that SC / ST / OBC category got more benefit from Shishu scheme than any other schemes.

In their 2012 study of ‘Role of Manufacturing Industries in India for Inclusive Growth’, Anjum and Tiwari (2012)¹⁰ concluded that the labour reforms and manufacturing industries have enabling India to get benefit from globalization and ensure inclusive growth.

Lama (2013)^11, in his study that surfaced hidden opportunities and difficulties, MSMEs faces. According to his report, MSMEs must increase their production and quality while cutting expenses and innovating. Focus must be placed on creating benevolent policies, a supportive workplace, adequate funding and cutting-edge technology for MSMEs if MSMEs are to stay in business.

Manna and Mistri (2017)¹² examined MSMEs status in India and study found that micro companies hold the top spot in every state, although several advanced states are also consistently strengthening their small- and medium-sized enterprises. The industry supports regional growth and lessens regional disparities.

Mohanty (2018)¹³ analyzed the condition and performance of the MSME sector and outlined the several initiatives undertaken by the government and SIDBI. According to the research, MSMEs have performed admirably over the previous 5 years. This industry’s importance for urban and rural development is increasing significantly, and it is expanding quickly.

Singh (2021)¹⁴ examined the MSME sector’s function, performance, various difficulties and future possibilities in India. The study came to the conclusion that this industry significantly contributes to India’s industrial output, export, employment and creation of a broad entrepreneurial base. However, the pandemic has impacted MSMEs in a variety of ways, suggesting that the government should implement the right policies to counteract its effects.

Das (2021)¹⁵ investigated the importance of MSMEs in India’s economic development. The study stated that MSMEs have made significant contributions to the country’s socio-economic growth by creating job opportunities, contributing to production and export and supporting development in backward and rural areas.

Objectives of the Study:

•  To examine the role of MUDRA in PMEGP
• To analyze the performance of different Category under MUDRA Scheme
• To study the performance of PMEGP in different state of India

Research Methodology:

 Research Design: The research study is descriptive in nature. This study is based on secondary data and has focused on the achievements Vs set target during the financial year 2023-24. The amount sanctioned and disbursed and the maintenance of the accounts under Mudra for the financial year 2023-24.

Data collection:

Sources of data: The present study is based on secondary data. The data collected from various government websites, newspapers, annual reports, journals, articles, MUDRA website and books.

Data Analysis and Interpretation:

The discussion is based on the Targets and achievements for MUDRA Scheme and its state wise achievements for all the states in India

In below given figure, researcher has studied MUDRA scheme in consolidation during the last 5 years that indicate during the FY 2022-23, there was disbursement of INR 450423.66 (in Cr) against the targeted INR 456537.98 (in Cr)

 

And in table 2 provides accounts of support disbursed to udmi for their business, which is till FY 2022-23 comes to INR 2298780 Cr against the planned INR 2348250 Cr.

Figure 3, above provides detailed bifurcation the three important schemes of MUDRA (Shishu, Kishor and Tarun) indicating that Shishu has the highest / maximum counts of Sanction and Disbursement during the Year 2022-23.

And found that Mudra disbursed against Shishu is highest in order followed by Kishore and Traun schemr is at the lowest bottom among the tree scheme where as figure (5) below indicate the year FY 2019-20 marked for maximum nos of A/C creation whereas .

figure (6) below Shishu has achieved the highest (162782.81 Cr ) counts of disbursement against INR 163528 Cr of sanctions in the same year.

 

In this study , we have further analyzed disbursement patters that concluded year 2019 in the life span of MUDRA has the maximum MUDRA disbursal for General Category.

Conclusion:

WIP ( Work in progress) – This is progress report till today. Looking forward for your suitable guidance please

References:

1. https://razorpay.com/learn/new-msme-definition-turnover-2020/
2. https://razorpay.com/learn/new-msme-definition-turnover-2020/
3. https://razorpay.com/learn/new-msme-definition-turnover-2020/
4. https://rb.gy/m6e6cx
5. Ibid
6. https://sidbi.in/en/ecosystem
7. Ibid
8. Soni MUDRA: Micro Units Development and Refinance Agency. EPRA International Journal of Economic and Business Review, 2016, 33-36.
9. Ramesh, Performance Evaluation of Mudra Bank Schemes – A Study. Anveshana’s International Journal of Research in Regional Studies, Law, Social Sciences, Journalism and Management Practices. 2016, 116-120.
10. Anjum, , & Tiwari, R. (2012). Role of manufacturing industries in India for inclusive growth. ZENITH International Journal of Business Economics & Management Research, 2(1), 97–104.
11. Lama, (2013). Micro, small and medium enterprises (MSME) in India: Problems and prospects. Business Studies, XXXIII & XXXIV, 2013 & 2014, 106–116.
12. Manna, , & Mistri, T. (2017). Status of micro, small and medium enterprises (MSME) in India: A regional analysis. IOSR Journal of Humanities and Social Science, 22(9), 72–82.
13. Mohanty, J. (2018). A study on micro, small and medium enterprises (MSME) in India: Status and its performance. International Journal of Research and Scientific Innovation, V(V), 105–114.
14. Singh, (2021). MSMEs sector in India: Current status and prospect. International Journal of Innovative Research in Engineering & Management (IJIREM), 8(4), 42–45.
15. Das, K. (2021). Role of micro, small, and medium enterprises (MSMEs) in economic development of India. International Journal of Multidisciplinary Research and Explorer (IJMRE), 1(9), 1–7.
16. Official website of MUDRA (http://www.mudra.org.in/)
17. Official website of MSME https://msme.gov.in/