In India, there are many micro, small and medium enterprises (MSMEs) which actively contribute towards promoting economic growth. The government of India has enacted the Micro, Small and Medium Enterprises Development Act under which it defines the MSMEs.
These MSMEs act as a backbone for the development of the nation. They play a significant role in the development of an informal economy. One such group of people who play an active roll in ensuring the availability of goods and services at affordable prices are street vendors.
Street Vendors do play a very prominent role in the urban society as they go from door to door to render their services be it for supplying fruits, vegetables, artisan products, food products, tea/coffee, and so on.
To help these people who fall under the unorganized sector of employment, the government of India has come up with 'PM Svanidhi Scheme'
Let's understand in detail about the PM Svanidhi Scheme.
About PM Svanidhi
In India, in urban society, a set of people provide goods and services at affordable rates right at the doorsteps of the customers. These people are commonly known as hawkers, vendors, rehriwala, thelawala, and so on as per the regional contexts.
They sell a range of products like fruits, flowers, vegetables, street food, hot beverages (coffee/tea), pakodas, textile, footwear, plastic products, artisan products and the list goes on.
These people work with small capital. They mostly rely on pawnbrokers, small scale lenders to secure working capital. Most of the banks, financial institutions do not provide loans for this group as the capital amount requirement is less and due to non-availability of an asset for collateral.
So, the Government of India has stepped in to provide capital to these set of small and medium entrepreneurs (SMEs).
Objectives of PM Svanidhi
It is a Central Sector Scheme which is funded by the Ministry of Housing and Urban Affairs and have the following list of objectives:
- To facilitate a working capital loan amount of up to Rs 10,000.
- To reward digital transactions.
- To incentivize regular repayment.
- The scheme is formulated to help street vendors with the above objectives as this will open an array of new opportunities for them to scale up the economic ladder.
Eligibility Criteria for PM Svanidhi
- The scheme is rolled out for all the street vendors. They should be actively engaged in street vending activities in any of the urban areas across India on or before March 24, 2020. Apart from this, vendors should be eligible for the list of below-mentioned criteria:
- Street Vendors should have Identity Card (ID) issued by the Urban Local Bodies (ULB) or by the Certificate of Vending.
- The street vendors who have been identified in the survey conducted by the ULB but are not yet issued an identity card or Certificate of ending.
- Provisional Certificate of Vending will be generated for such vendors via an IT-based platform. The Urban Local Bodies are encouraged to issue the street vendors with a permanent Certificate of Vending and Identification Card within a month.
- The street vendors of surrounding development or rural areas or peri-urban areas and are vending in and around the geographical limits of the ULBs and have secured a Letter of Recommendation (LoR) to the effect from the ULBs or Town Vending Committee.
- Those Street Vendors, who are left out of the ULB identification survey or who began their street vending activity after the completion of the survey and have secured a Letter of Recommendation (LoR) from Town Vending Committee or the Urban Local Bodies.
Please Note: The scheme is valid for beneficiaries who belong to only those States or Union Territories which have been notified Rules and Scheme under the Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act of 2014.
However, street vendors from Meghalaya can participate in this scheme despite the state having its own State Street Vendors Act.
Details of PM Svanidhi
- The beneficiaries who are eligible under the scheme can avail a working capital loan of up to Rs 10,000 for a one-year duration.
- Loan amount needs to be repaid in monthly instalments.
- No collateral will have to be furnished by the beneficiaries to the lending institutions.
- On early repayment or timely repayment, the beneficiaries will be eligible for the next cycle of a working capital loan; loan amount limit will be enhanced.
- Beneficiaries will not be charged with a prepayment penalty for early repayment ahead of the scheduled date.