Pradhan Mantri Mudra Yojna: A bunch of huge lies and incredible art of deception


In May this year BJP president Amit shah and his party colleagues and ministers gave a shock treatment to India by declaring through Pradhan Mantri MUDRA Yojana. Modi government claimed it had provided self employment to 7.45 crore people in last two years which is much higher than the promised two crore per year.

Since then, a lot of people are trying to match the numbers of this claim with the available government data. But this government believes in not releasing actual data. If one tries to find out the the data on MUDRA, the actual disbursal figures (both number of people having already availed the credit facility and the amount disbursed under this particular scheme), it is nowhere available other than the government’s MUDRA website.

And that claim almost matches the claim of Amit Shah and Smriti Irani. But our problem is the authenticity of that numbers without any adequate corroboration from relevant sources. So, for a common man, there is no other option but to believe what government and BJP says is true.

Few days ago, a friend texted a web link insisting me to watch a programme broadcast on NDTV. He pointed out that the claims made by the government was a farce. MUDRA CEO admitted there was no clarity on the number of employment opportunities created.

Micro Units Development & Refinance Agency Ltd is a refinancing agency initially created as a 100% subsidiary of SIDBI. Here, we notice that the SIDBI itself is one of the biggest refinance agency under the government of India giving maximum importance to Medium, Small & Micro Enterprises (MSME) segment.

Another major player in the market is NABARD which majorly caters to agriculture and rural development segments. MUDRA website clearly states that the focal points of the scheme which are Refinance to Micro Finance Institutions, Banks, NBFCs and other lending agencies to push micro credit, women oriented units, transport vehicle loans, agriculture loans, business loan for vendors, traders and shop keepers etc.

So it is clear that MUDRA loan is not a new product, but a select category of existing loan products put under a new name because all these mentioned sectors have received regular funding through different lending agencies and banks since ages and these are all part of the “Priority Sector Lending” since many years.

Many people suggest that the major change that MUDRA made was where one doesn’t have to pledge or give any collateral to avail the loan and this was the first time such a facility was made available. I would disagree with them because Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) has already been existed for 17 years.

Technically speaking, as a refinance agency, MUDRA should claim only those numbers which it has refinanced. Here, we have to see how much of the allocated funds were taken from MUDRA by banks and other financial institutions, that are the actual lending agencies.

PMMY annual report says that as on 31 March 2017, out of the allocated Rs 5000 crore, lending agencies availed only Rs 3291.66 crore. That itself questions the government claim of runaway success of the scheme. On 28 March this year The Mint reported that only 62% of the set disbursal target had been achieved in FY 17.

As per the scheme website, the maximum amount has been disbursed under the Shishu category i.e Rs 50,000 or less as disbursal. For a minute, let us take Rs 20,000 as the average disbursement. In this way, if you divide Rs 3291.66 crore with 20,000, you get a number which is 16,45,830. That means, actual numbers of people availed MUDRA loan facility is not more than 16,45,830. Then from where did this 7.45 crore number come in? There lies the trick of “Modinomics” – the real game of data fudging. Let us have a look.

Let us check the government claim in more detail. To start we have to understand which are the institutions giving credit to the target group. Here the list includes all the scheduled banks, co-operative banks and credit societies, Micro Finance Institutions, Non Banking Finance Companies, SIDBI and NABARD. So, the next question arise – when did these institutions started lending to the target group coming under MUDRA? The answer is since ages! The graphical explanation below from Bloomberg will explain the details of lending institutions.

Let us check the year wise lending growth of banks to this particular segment. This RBI report clearly mentions the sector wise credit growth to the segment MUDRA aims at. And remember, this is only of banks. There are many other financial institutions which cater to the same segment. To know more about their numbers, let us check Micrometer – a quarterly report published by Micro Finance Institutions.

In March 2017 it was reported that MFIs disbursed outstanding till March this year stood at Rs. 50,266 crore to the segment. The same report mentioned that ‘on the basis of updated data reported by lending institutions as of 31 March 2017, microfinance industry has total loan portfolio (i.e. loan amount outstanding) of Rs 1,06,916 Cr. It is estimated that this number roughly represents over 90% of the total industry portfolio excluding SHGs.

This data is of NBFC-MFIs (MFIN members) and other key lenders under the category of Banks, SFBs, NBFCs and non-profit MFIs”. That means, we have to add the numbers of the institutions like SIDBI & NABARD etc as they are major players and MUDRA itself is a 100% subsidiary of SIDBI. This 2015-16 annual report gives complete comparison data of bank credit growth to the MSE segment from 2008 to 2016 in page No.6. This NABARD document will demolish the government claim of generating 7.45 crore self employment because what Modi government has been trying to do is, in the prime minister’s usual style, to appropriate the numbers of the few ongoing schemes as his success story.

A press release on 1 January 2017 from Ministry of Finance said that the number of MUDRA beneficiaries as on 9 December 2016 stood at 2.12 crore. And that was the number since the scheme’s inception. And as per Amit Shah, Smriti Irani and other BJP leaders, banks and other financial institutions have already disbursed loans to 5.33 crore people under MUDRA in 110 days – 10 December 2016 to 31 March 2017.

Do they think the entire Indian population is have received education at the RSS run schools to believe this crap? In a segment where total outstanding is more than Rs 12 trillion, a disbursal of Rs 3162 crore changed everything. That’s what the government of the day would have us believe! Incredible, Mr. Modi and and his team! Nobody in this world can lie like you with so much confidence.

(Views expressed here are the author’s own and Janta Ka Reporter takes no responsibility for the content of this blog)