Sagarmala Project

On 25 March 2015, the Union Cabinet, chaired by Prime Minister Narendra Modi, gave the final nod to proceed with the Sagarmala Project and prepare the concept and institutional framework. It was a significant development in India’s growth story. Taking ex-PM Atal Bihari Vajpayee’s dream project forward, Modi has rightly identified Sagarmala as a crucial infrastructure initiative whose development has the potential to boost India’s GDP by 2%.

Why is Sagarmala Project So Crucial for India?

India is bound by sea on three sides and has a 7,516.6 km coastline, making it the 7th largest in the world. Therefore, it is only natural that Indian ports handle 90% of the export-import trade volume. But that does not tell the entire story. The railways contribute 9% to the GDP, the road sector contributes 6%, whereas the ports’ share of GDP is only 1%! This contradiction reflects the vast potential for development of coastal cities and ports.

India suffers from poor port linkages, under performance of existing port infrastructure and lack of developed infrastructure near ports, for value addition of inbound or outbound merchandise. Along with this, an inefficient inter-modal transport connectivity results in high cost of logistics and exports. The share of merchandise trade in GDP for Germany is 75%, and for European Union it is 70%. For India, it is 42%. The Sagarmala project aims to improve this.

The present government has therefore prioritised the development of coastal cities, along with existing and new port development, as growth drivers.

The Sagarmala Project Stands on Three Pillars of Focus

·         Supporting port-led development with pro-active policy initiatives and providing institutional framework to assist all stakeholders.

·         Modernising port infrastructure.

·         Developing integrated transport infrastructure for connecting the coast to the hinterland.

The Current Infrastructure Scenario

Unfortunately, the country has not focussed on developing the coastal and port infrastructure in an integrated manner that would have realised its full potential. Today, most ports lack adequate cargo handling infrastructure. The ship turnaround time is poor compared to most other developed ports in China, Japan, Korea, Dubai, Netherlands, etc. The loading-unloading processes are cumbersome. The rail and road connectivity to the hinterland is inadequate. Industrial centres near port locations that can offer value addition are also lacking.

Integrated Development at the Core of Sagarmala Project

Under the project, 12 smart cities will be developed near ports with an investment of Rs 50,000 crore. These will be integrated townships that will have affordable housing and implement green initiatives for sustainable living. The government has identified 1,208 islands for development along with 189 light houses. This is likely to boost both domestic and international tourism significantly.

Giving boost to economic activity near coastal locations, Coastal Economic Zones (CEZs) will be established. These CEZs will be planned with modern support infrastructure and adequate fiscal incentives to attract investment. Kandla Port in Gujarat, for instance, has around two lakh acres of land in its possession and has been identified as a potential CEZ.

The project will undertake redevelopment of existing port infrastructure through upgrade in port handling equipment and extensive use of IT in improving monitoring and operations of port activity. Jawaharlal Nehru Port Trust, which is one of the 12 major ports in India, will receive Rs 4,000 crore to develop its SEZ.

The project will identify suitable port locations with deep drafts to enhance shipping and port handling capacity. Specialised ports with focus on handling coal, energy, chemicals, commodities, etc., will be developed.

Development and linking of short-sea shipping, coastal shipping and inland waterways transportation will get the due attention. Further development of ship building, ship repair and ship recycling industry will also be a priority. Enhanced development of offshore drilling and storage platforms is another objective of the project. It also aims at developing logistics parks and warehousing near coastal locations to support port activity.

With its long coastline, India offers great potential for developing offshore renewable energy and government has accorded due priority to attract investment in this area. The power generated will feed the coastal activity and also contribute to the national grid.

The Government Means Business

The government is planning a comprehensive National Perspective Plan (NPP) to be prepared in six months. The NPP will identify suitable geographical locations along the coast to develop as CEZs. The NPP will endeavour to synergise and integrate the CEZs with various existing government development initiatives like the National Highways Development, Inland Waterways, Smart Cities, SEZs, Industrial Corridors and Dedicated Freight Corridors.

Sagarmala Coordination and Steering Committee

To plan, initiate, supervise and monitor the Sagarmala project at the apex level, A Sagarmala Coordination and Steering Committee (SCSC) will be constituted under the chairmanship of the Cabinet Secretary and will have on board Secretaries from the Ministry of Shipping, Road Transport and Highways, Industrial Policy and Promotion, Environment, Forest & Climate Change, Revenue, Expenditure, Defence, Home Affairs, Chairman Railway Board and the CEO of NITI Aayog. The SCSC will ensure fund availability and oversee smooth coordination among various arms of the central government and state governments and agencies.

Under the Federal structure, the states will play a major role in implementing and facilitating development in their respective areas. Each stakeholder state will have a State Sagarmala Committee (SSC) that will be headed by the Chief Minister or the Minister in charge of Ports. The panel will comprise members of relevant departments and agencies. The State Maritime Board or the State Port Development will report to the SSC and monitor and implement projects in the state. To facilitate investments in CEZs and port development activities, the government is open to setting up of Special Purposes Vehicles (SPVs). The SSC will coordinate with the SPVs for speedy implementation of individual projects.

The central government proposes to establish Sagarmala Development Company (SDC), under the Companies Act 1956, that will extend equity support to SPVs operating in various states. The SDC will be mandated to prepare Detailed Master Plans for various proposed zones within a period of two years and submit a business plan within six months.

The central government has allocated Rs 692 crore for FY ’15-’16 for launching of the initial phase.

Sagarmala Could Well Emerge a Jewel in the NDA Crown

The need exists as does the opportunity to develop India’s coastal potential and while it was Atal Bihari Vajpayee who dreamt of it, the credit for its launch and implementation will remain with PM Modi. If successfully implemented, this will be yet another success story for the PM to flaunt at the time of the next general elections.

Pradhan Mantri Krishi Sinchai Yojana

                                             The Indian economy is highly dependent on the agricultural sector. A huge population essentially translates into a need to address the growing food demands each year. This dependency is best seen in a year when a below-normal monsoon sends prices of food items ratcheting up.

Over the past years, fears of the El Nino phenomenon have kept farmers and economists worried. A number of farmer deaths have also been recorded across the country. Most of these are linked to crop failure followed by lack of rainfall and inadequate irrigation. Food and retail inflation are natural corollaries to the situation and this hurts the economy. In 2014-15, foodgrain production in the country dropped by about 5.3 per cent.

In an attempt to improve the agricultural productivity, the government of India has come up with a new scheme, the Pradhan Mantri Krishi Sinchai Yojana (PMKSY). According to news reports, the Cabinet Committee on Economic Affairs (CCEA), which is chaired by Prime Minister Narendra Modi, finalised the details of the scheme.

Indian Finance Minister Arun Jaitley said that the cabinet has “decided that in 5 years, INR 50,000 crore from the central budget would be utilised for the Pradhan Mantri Krishi Sinchai Yojana. States’ share will be over and above this”. The money shall be spent entirely towards improving farm yields and productivity, he said. The spending target, under the scheme, for the current financial year is about INR 5300 crore. This is almost twice the corpus set aside for any agricultural irrigation scheme in earlier budgets. Over and above the central government’s allocation, states shall add their funds to the scheme.

If the scheme turns out to be a success, economists and rural managers believe that the crop production could witness a manifold growth.

Details of the Pradhan Mantri Krishi Sinchai Yojana

According to current estimates, out of the 142 million hectares of agricultural land in India, only about 45 per cent has any arrangement for artificial irrigation. The rest of the agricultural farm is dependent solely on rainfall for its water needs. A delay in rainfall or a failure spells disaster for the farmers and shortfall in crop is the subsequent worry faced by the people. The government of India estimates that by spending about INR 5300 crore this fiscal, an additional 6 lakh hectares of agricultural land can be brought under irrigation. Apart from this, 5 lakh hectares of land will also receive the benefits of drip irrigation as a result. Micro-irrigation projects (“Har Khet Ko Pani”) and end-to-end irrigation solutions will be the key focus of this scheme.

The scheme shall also assume responsibility for various irrigation projects that were poorly implemented by previous governments despite adequacy of funds. These projects shall be improved based on strict quality guidelines. About 1,300 watershed projects that have remained in limbo shall now be completed.

According to news reports, the Finance Minister said, “The major objective of the PMKSY is to achieve convergence of investments in irrigation at the field level, expand cultivable area under assured irrigation, improve on-farm water use efficiency to reduce wastage of water, enhance adoption of precision-irrigation and other water-saving technologies”.

Apart from the irrigation projects, INR 200 crore from this scheme will be earmarked as Agri-Tech Infrastructure Fund (ATIF) – the corpus required to promote the National Agricultural Market (NAM). This will give farmers easy access to the markets for sale of their produce. The FM also said that the budgetary allocation for this scheme may tie into the material component of the MNREGA (Mahatma Gandhi National Rural Employment Guarantee Act).

Irrigation and Water Conservation

Water conservation and cutting down on wastage is key to bringing irrigation facilities to every farm in the country. This makes introduction of sustainable water preservation practices and optimisation of water resources (More Crop Per Drop) just as important as introduction of new irrigation facilities. The PMKSY shall also explore a number of methods to treat and re-use municipal water for these irrigation projects. Water recycling shall hold much importance in the success of the scheme, said the FM. Private investments in these plans shall also be solicited by the government.

Programme Structure

The planning and implementation of the Pradhan Mantri Krishi Sinchai Yojana has been decentralised and the states shall now draw district-level plans for its successful execution.

The long-term adherence to these District Irrigation Plans (DIP) and State Irrigation Plans (SIP) will be supervised by a National Steering Committee (NSC) with representation from the various ministries involved and shall be monitored by the Union Ministers. The Prime Minister himself shall chair the committee.

The implementation of the scheme shall be overseen by a National Executive Committee (NEC), which shall be chaired by the Vice-Chairman of the NITI Aayog.

PMKSY and Pro-farmer Schemes

The Pradhan Mantri Krishi Sinchai Yojana is part of a group of pro-farmer measures that the NDA government endeavours to implement. Earlier, the Cabinet led by Modi agreed on various amendments to the Land Acquisition Act of 2013, which are likely to benefit those farmers whose lands are acquired by the central government for implementation of various projects. Apart from these, the NDA government has launched a number of social security schemes (pension, insurance schemes etc.) targeted at improving the lot of the poor masses in the country, with specific emphasis on the rural poor. Earlier this year, the government had launched the Paramparagat Krishi Vikas Yojana – a scheme to support organic farming endeavours.

USTAD: Skills Upgradation and Training Initiative for Craftsmen

On 14 May 2015, Union Minister for Minority Affairs Najma Heptullah launched a major welfare scheme in Varanasi, aimed at preserving and upgrading traditional arts and handicraft skills, in a move that will benefit thousands of traditional craftsmen, many of whom belong to minority communities.

Upgradation of Skills and Training in Ancestral Arts/Crafts for Development (USTAD) is a Rs 17-crore initiative to preserve and promote traditional skills and ensure wider market access. Launching USTAD in Varanasi holds political and social significance.

Why Varanasi?

Varanasi has been a traditional manufacturing centre and trading hub for handloom weavers. There are over one lakh weavers in the region of which over 40,000 remain active. In addition, there are thousands of support workers and tradesmen who are involved in ancillary activities like dyers, card makers, design artists etc.

Varanasi is a traditional home to the famous Banarasi saree, while nearby Bhadohi is the hub for carpet weaving and trading. A large section of the weavers involved in both industries come from the minority community, and therefore, USTAD becomes relevant both politically and socially. Besides, it’s also Prime Minister Modi’s constituency.

Traditional Arts and Craftsmanship is Dying

India has evolved its unique identity in traditional arts and craftsmanship, as skills have been passed from generation to generation. Indian handicrafts and handloom products have reached all corners of the world, creating a unique space based on design, quality and superior craftsmanship.

However, with modern technology and automation, traditional weavers have been facing a strong challenge from the power loom sector, which mass produces fabric at lower costs. Younger generation not willing to learn the skills and continue the family tradition is another challenge being faced by families involved in the trade for generations.

In earlier times, highly skilled craftsmen were honoured and given financial incentives and special privileges by the rulers. With changing times most of them involved in traditional skills had to live in penury due to dwindling income. This is one of the main reasons that the younger generation has been unwilling to continue with traditional family skills. It is in this context that the government has launched USTAD to arrest migration of the younger generation to other jobs by developing traditional skills, creating opportunities and offering further support to widen market access.

USTAD: A Unique Initiative

Developing traditional skills has been close to PM Modi’s heart and with large number of workers involved in this sector across India, the government has been keen on ensuring that this segment becomes a part of the ‘Make in India’ initiative and receives full support from government in terms of funding and infrastructure.

USTAD will draw professional inputs and support from organisations like National Institute of Design (NID) in Ahmedabad along with other focused institutions to assist in creating programmes that will ensure higher acceptance of traditional products by a diverse clientele.

A very good example of a traditional industry is the jute industry. It is based mostly in West Bengal and had been struggling for many years with low demand, obsolete technology and dropping prices. With closer involvement of the private sector, leading designers got involved in developing a range of products, garments and furnishings based on jute, and today these are slowly making a mark in global markets.

In a unique move, the government has roped in e-commerce company Snapdeal to offer its platform to promote traditional craftsmen and products. If promoted adequately, this would be the first time that craftsmen in interior India will get the opportunity to showcase and market their unique offerings to a wider audience, something that was out of reach earlier. The potential is immense for both artisans and the support industry.

USTAD: A Shot in the Arm for Minority Communities

The timing couldn’t have been better. There is a vast army of very skilled craftsmen belonging to minority communities. This large but unseen army has been behind the success of India’s global image for unique and skilled handicrafts and handloom products.

Unfortunately, these minority communities lack education, housing and related basic amenities that is a right of all citizens. Despite challenging conditions, families have remained committed to the family craft and skill and continued to pass it on to the next generation.

USTAD will come as a boon to this segment, as for the first time they will have access to contemporary designs, development support, training and more importantly, support for wider market access. All of which together should result in higher income for these people. If successful, USTAD could well be extended to a wider segment with higher funding and support from the government.

USTAD: A Continuation of the Government’s Thrust on Social Welfare

PM Modi-led NDA government has recently launched a slew of social welfare schemes aimed at providing relief and protection to a large segment of the population that has not had access to India’s developing story.

The Prime Minister launched the Jan Dhan Yojana to bring a vast majority into the banking system and ensure fast and efficient delivery of welfare benefit through direct cash transfer to the targeted segment. He further followed it up with three welfare initiatives recently; the Pradhan Mantri Suraksha Bima Yojana (PMSBY), Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and the Atal Pension Yojana (APY), all directed towards providing relief and insurance cover to the underprivileged. USTAD is an extension of the welfare initiative that the Prime Minister has launched.

With the present government completing one year in office, it can boast of launching a series of welfare programs. Let’s hope USTAD draws support and involvement from all stakeholders, after all it involves India’s heritage.

Pradhan Mantri Kaushal Vikas Yojana (PMKVY)

What is Pradhan Mantri Kaushal Vikas Yojana (PMKVY)?

Even as he launched the Make in India campaign inviting investors from all over the globe to invest and set up businesses in India, Prime Minister Narendra Modi promised an abundance of skilled labour in the country. Complementary to this was the idea of skills development among the youth of the nation. The Pradhan Mantri Kaushal Vikas Yojana (PMKVY) was thus envisaged as a key measure to impart skills-based training to young men and women, making them capable of earning and supporting the nation’s anti-poverty endeavours. The scheme becomes all the more important in the Indian society which has the world’s largest youth population that requires employable skills (356 million population between 10 and 24 years of age – The Hindu, Nov 2014).

Earlier this year, on 20 March 2015, the government of India gave the Ministry of Skill Development and Entrepreneurship a formal go-ahead to formulate and implement the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) through the National Skill Development Corporation. With a total outlay of about INR 1,500 crore, the PMKVY is likely to impart skills training to 24 lakh youth of the country, focusing on the Class X/XII dropouts and lower income groups. The scheme was developed over a period of almost three months and its implementation started in select states (primarily Bihar) by early June 2015. The scheme will be launched in all states of the country on 15 July – National Skills Day. India’s unemployment rate averaged about 4.9 percent by early 2014. This scheme should bring that number down by a reasonable measure.

Also read: Skill India – A New Programme to be Launched in March 2015

Skills Needs Assessment

According to the PMKVY plan published by the Ministry of Skill Development and Entrepreneurship in March 2015, one of the key objectives of the scheme was to cover the skills training of about 24 lakh people. The specific skills imparted would be decided based on the National Skill Qualification Framework (NSQF) and on the basis of feedback from the various industries that would potentially employ the trainees.

The specific skills trainings to be imparted have been assessed by the National Skill Development Corporation (NSDC) on the basis of demand in recent skills gap by a study for 2013-17 period. Central ministries and state governments departments were consulted and the inputs of various industry and business heads were also considered. Skills needed to implement various other flagship schemes such as Digital India were also assessed. Currently, about 428 job roles are being catered to by the skills training imparted under the scheme.

Must Read: USTAD – Skills Upgradation and Training Initiative for Craftsmen

Enrollment Process

The government has partnered with various telecom operators to create awareness about the PMKVY. After the nationwide launch telecom operators are likely to send out mass SMS about the scheme and will provide potential candidates a number to call. Candidates need to give a missed call to this toll free number, following which they shall receive an automated call back connecting them to an IVR. The potential candidate will, at this stage, need to input his/her details into the system. These details will be recorded, and screened. Candidates eligible to enroll for the training programmes will be provided details of the nearest training centre and will be asked to report on the training dates.

Implementation of the Pradhan Mantri Kaushal Vikas Yojana

In keeping with the draft plan, the scheme was launched (in Bihar) and the NSDC partnered with about 24 sector skill councils. As of 1 July 2015, about 1,17,564 people from all parts of the country have already enrolled for skills training. Training has commenced for some 1,07,080 trainees already. The scheme’s implementation is being undertaken by NSDC’s training partners. The NSDC has some 187 listed training partners with 2300 training centres spread out in almost all the states of India. While the scheme is on a pilot mode in select states, a nation-wide launch is expected by mid-July.

The total outlay planned for the scheme is over INR 1,500 crore, of which INR 1120 crore is likely to be allocated towards the skill training of some 14 lakh youth. Additionally, INR 220 crore will be spent towards the “recognition of prior learning”. The scheme budget includes INR 67 crore that shall be spent on spreading awareness and encouraging enrolment.

This includes implementation of the website and running awareness campaigns. In this effort to create awareness about the PMKVY, the NSDC will partner with state governments and municipal organisations and use the administrative machinery extensively to mobilise candidates from the grassroots level. The NSDC has also partnered with various business houses and corporates in an effort to garner mentorship for the candidates and to secure placements once their training is completed. The government has allocated INR 67 crore towards this. The scheme has the youth of the North Eastern region of India in special focus. This region has been traditionally neglected and hence a separate allocation of INR 150 crore has been made towards the training of youth in this region.

Apart from training, the candidates shall also go through an assessment at the end of the training schedule. A certificate of merit shall also be issued to candidates at the end of this training period based on the assessment. ‘Third party assessment bodies’ have been roped in by the NSDC to assess the candidates on the skills acquired and a monetary incentive or reward is given to exemplary candidates. The average monetary reward that each successful candidate is likely to get is about INR 8000.

The scheme has placed much focus on the training partners. These partner institutions have been studied and assessed before enrolment. Digital training facilities and able instructors are highly valued by the NSDC for the training sessions. The curriculum developed is highly relevant and efficient in practical employability. Training sessions and the training institutes will be constantly monitored by state government agencies and by the sector skill councils. Feedback from the candidates themselves will also be sought.

Sukanya Samriddhi Account: New Scheme for a Girl Child in India

Save for every girl child in India. Reinforcing this idea, Prime Minister Narendra Modi launched ‘Sukanya Samriddhi Account Scheme’, a small savings scheme as a part of the ‘Beti Bachao Beti Padhao’ campaign. It is also considered a part of the government’s initiative to increase the percentage of domestic savings, which has reduced from 38% of the GDP in 2008 to 30% in 2013. This scheme will encourage parents to save for the education and future of their girl child.

How to Open the Sukanya Samriddhi Account?

1.    Guardian to open the account: The account can be opened only by parents or legal guardians for upto two girl children. In case of twins or triplets, an exemption will be made on production of a certificate from authorised medical institutions.

2.    Age Eligibility: A Sukanya Samriddhi account can be opened for a girl child till she attains the age of 10. The scheme started from 2 December, 2014. An initial grace period of one year has been announced for convenience. A girl child, who is born between 2 December, 2003 and 1 December, 2004, can open account by 1 December, 2015.

3.    Account in the name of the beneficiary: Sukanya Samriddhi Scheme can only be opened in the name of the girl child. The depositor (guardian) will be an individual, who deposits amount in the account on behalf of the minor girl child.

4.    One Girl One Account: Only one account can be opened per girl child.

5.    Where to open Account: Sukanya Samriddhi account can be opened in Post Offices or authorised Banks (State Bank of India, Bank of Baroda, Punjab National Bank, Bank of India, Canara Bank, Andhra Bank, UCO Bank, and Allahabad Bank, to name the few).

More Information on Sukanya Samriddhi Account

1.    Account Transferability: The account can be opened with an amount of Rs. 1000. It can be transferred from the original location to anywhere in India as the girl child relocates.

2.    Minimum Contribution: A minimum contribution of Rs. 1000 per account has to be deposited per year. A maximum of Rs.1, 50,000 per account can be deposited. There is no limit in the number of deposits in a financial year. The money can be deposited through cash, cheque or draft.

3.    Penalty: A penalty of Rs.50 will be imposed if the account is not credited with the minimum amount.

4.    Rate of Interest: The scheme is offering an interest rate of 9.1% per year. However, it will be revised in April every year and the change will be communicated subsequently. The interest will be compounded yearly and directly credited to the account.

5.    Term Period: The guardian is expected to deposit amount in the account only till the completion of 14 years. No deposits after that is required till the maturity of the account.

6.    Withdrawal: A premature withdrawal (at the end of the previous financial year) of 50% of the accumulated amount is allowed after the girl child turns 18.

7.    Closure of Account: The account can be closed only after the child turns 21. If the money is not withdrawn even after that, it will continue to earn the interest.

8.    Taxation: As per Section 80C of Income Tax Act, the investment (up to Rs.1.5 lakhs) under the scheme, all the payments including the interest payment and the total maturity amount will be fully exempted from taxation.

What Are the Documents Required for Opening an Account?

1.    Birth Certificate of the girl child.

2.    Address and photo identity proof (PAN Card, Voter ID, Aadhar Card) of the guardian.

MUDRA Bank

The Prime Minister Narendra Modi  launched the promised Micro Units Development and Refinance Agency Ltd (MUDRA) Bank on 8 April, 2015 with a corpus of Rs 20,000 crore and a credit guarantee corpus of Rs 3,000 crore. The launch was the fulfillment of an announcement made earlier by the Finance Minister Arun Jaitley in his FY 15-16 Budget speech.

How Can MUDRA Bank Make a Difference to the Economy?

Most individuals, especially those living in rural and interior parts of India, have been excluded from the benefits of formal banking system. Therefore, they never had access to insurance, credit, loans and other financial instruments to help them establish and grow their micro businesses. So, most individuals depend on local money lenders for credit. The loan comes at high interest and often with unbearable conditions, which make these poor unsuspecting people fall in a debt-trap for generations. When businesses fail, the borrowers become vulnerable to the lender’s strong-arm tactics and other forms of humiliation.

As per NSSO Survey of 2013, there are close to 5.77 crore small-scale business units, mostly sole proprietorships, which undertake trading, manufacturing, retail and other small-scale activities. Compare this with the organised sector and larger companies that employ 1.25 crore individuals. Clearly, the potential to harness and nurture these micro businesses is vast and the government recognises this. Today, this segment is unregulated and without financial support or cover from the organised financial banking system.

The principal objectives of the MUDRA Bank are:

1.    Regulate the lender and the borrower of microfinance and bring stability to the microfinance system through regulation and inclusive participation.

2.    Extend finance and credit support to Microfinance Institutions (MFI) and agencies that lend money to small businesses, retailers, self-help groups and individuals.

3.    Register all MFIs and introduce a system of performance rating and accreditation for the first time. This will help last-mile borrowers of finance to evaluate and approach the MFI that meets their requirement best and whose past record is most satisfactory. This will also introduce an element of competitiveness among the MFIs. The ultimate beneficiary will be the borrower.

4.    Provide structured guidelines for the borrowers to follow to avoid failure of business or take corrective steps in time. MUDRA will help in laying down guidelines or acceptable procedures to be followed by the lenders to recover money in cases of default.

5.    Develop the standardised covenants that will form the backbone of the last-mile business in future.

6.    Offer a Credit Guarantee scheme for providing guarantees to loans being offered to micro businesses.

7.    Introduce appropriate technologies to assist in the process of efficient lending, borrowing and monitoring of distributed capital.

8.    Build a suitable framework under the Pradhan Mantri MUDRA Yojana for developing an efficient last-mile credit delivery system to small and micro businesses.

Major Product Offerings

MUDRA Bank has rightly classified the borrowers into three segments: the starters, the mid-stage finance seekers and the next level growth seekers.

To address the three segments, MUDRA Bank has launched three loan instruments:

1.    Shishu: covers loans upto Rs 50,000/-

2.    Kishor: covers loans above Rs 50,000/- and upto Rs 5 lakh

3.    Tarun: covers loans above Rs 5 lakh and upto Rs 10 lakh

Initially, sector-specific schemes will be confined to “Land Transport, Community, Social & Personal Services, Food Product and Textile Product sectors”. Over a period of time, new schemes will be launched to encompass more sectors.

Some of the Offerings Planned for the Future:

1.    MUDRA Card

2.    Portfolio Credit Guarantee

3.    Credit Enhancement

Can MUDRA Really Be a Game Changer for India?

Yes it can. See the existing demographics. Majority of Indians are poor and live in rural and interior parts of India. Most are excluded from getting facilities that would be termed very basic, even by Indian standards.

Most people do not have access to farmland and in the absence of jobs, are left to their own creativity to feed themselves and survive. They figure out ways to do odd jobs in exchange of money or barter their services. Most of these people belong to scheduled castes, scheduled tribes and other backward classes. It is to be noted that most of the micro enterprises, retail or trading activity, are initiated and controlled by women, with no exposure to education, formal training or access to any form of banking support.

Now visualise this. If India could harness this free spirit of enterprise and offer some guidance, support, training and financial assistance, the potential to get an immediate jump in GDP is there for the asking. Narendra Modi recognises this and was clear of the potential of this low-hanging fruit.

If MUDRA can continue to retain focus on the underprivileged and extend its reach to the interiors, it can well emerge as a bigger success story than what Grameen Bank of Bangladesh ever was or will be.

There is an old saying that goes like this: “Give a man a fish you feed him for a day, teach him how to fish and he will never go hungry”. MUDRA Bank is a step by the government that can be a game changer in giving birth to a new set of entrepreneurs, some of whom may scale heights not imagined today. This is far better than giving subsidy, which may seem welcoming at first, but does little to help an individual strive for a better life. MUDRA is the way to go.

The modalities of functioning of MUDRA Bank are in place and it has been decided that the funding activity will be carried out by microfinance institutions. However, the small businesses have to wait to get full information on Mudra Bank and have a clarity on who all are eligible for loans and how to get the benefits of this scheme.

Recent Developments

·         Hasmukh Adhia, union financial service secretary said that Mudra Bank will be first set up as a subsidiary of the Small Industries Development Bank of India and later will be converted to a full-fledged bank through an Act of Parliament. Adhia made this announcement during a ‘roundtable on financing of innovations’ which was attended by chiefs of banks and financial institutions, and also the President of India. Although Adhia did not disclose the details about the set up of Mudra Bank, he said that the Prime Minister will launch it soon.

·         MUDRA bank has join hands with 19 state and regional level coordinators so as to reach the small entrepreneurs who have limited branch presence and are cut off from the general banking system. The initiative taken by the government is expected to be helpful for the small and micro businesses. It is also expected that these businesses will generate 10 times more number of jobs which are normally generated by the big business firms/companies at present.