Analysis of Pradhan Mantri Mudra Yojana (PMMY) in Indian Economy

Abstract

As per the survey of National Sample Survey Office (NSSO)in the year 2013, there were 5.77 crore small/micro units in the country, mostly individual proprietorship‘Own Account Enterprises’ which employ around 12 crore people. More than 60% of these units are owned by persons belonging to weaker sections of the society, the Scheduled Castes, Scheduled Tribes, Other Backward Classes, Minorities and Women. Predominantly these units do not have access to the proper banking system and are forced to get financial assistance from informal sources, or use their limited own funds.India’s MSME is immense, imperative and yet challenging market segment. Vast, because the sector provides employment to 117million people through 51 million (2014–15) organized and unorganized enterprises. Vital, because the MSME sector is contributing 37.5% (2012–13) of total GDP and has the potential to solve the unemployment problem.  Finance is a key significant factor for setting up a new start-up and it acts as a blood which is necessary for the survival of the business.  Finally, it is challenging because the sector is in need of credit and depends almost completely on informal finance or self-financing to fund its 56% of credit gap. The reasons for this credit gap are not much difficult to find. Formal financial institutions (FIs) struggle to evaluate the credit worthiness of MSME customers, as they lack history of credit, do not possess business records, and are not capable to offer collateral against the loan.  In this context, this research article brings forth the Micro Units development and refinance, vision. mission and purpose of MUDRA, SWOT analysis of PMMY, benefits of MUDRA loan, providing credit support to the weaker sections, growth of disbursal of mudra loans and impact on the economy.