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The growth of entrepreneurship in the non–corporate small business sector (NCSB) in smaller States has not received any major boost under the Central government’s ambitious MUDRA loan scheme.
Data show that States that already have higher Credit–Deposit (C-D) ratios — a yardstick that indicates better access to institutional credit — are the ones reaping the benefit of the scheme.
While six large States led by Tamil Nadu have received over 50 per cent of the ₹6.82-lakh crore MUDRA loans disbursed till date, a majority of North-East States and Union Territories have not received even 1 per cent of the total MUDRA loans.
Interestingly, 60 per cent of the total loan sanction comes from these top six States.
MUDRA, a financial institution that stands for Micro Units Development and Refinance Agency Ltd, was set up by the government for the development and refinancing of micro enterprises. The scheme announced in 2016 is aimed at providing funding to the non-corporate small business sector through various last-mile financial institutions.
The main challenge
“The biggest bottleneck to the growth of entrepreneurship in the NCSB sector is the lack of financial support. More than 90 per cent of the sector does not have access to formal sources of finance,” states the MUDRA website.
However, the data reveal a different story: Entrepreneurs from Tamil Nadu have received maximum loans (10 per cent). Those from Karnataka share the top place with their Tamil Nadu counterparts. Entrepreneurs from Maharashtra, Uttar Pradesh, West Bengal and Bihar along with the top two States share among themselves over 50 per cent of the loans.
Uttarakhand, Himachal Pradesh and Jammu and Kashmir have received just one per cent of the total loans.
Tamil Nadu and Maharashtra have a C-D ratio of more than 100 per cent. Andhra Pradesh and Telangana — the other States with higher C-D ratios — have received 4 per cent and 2 per cent of the loans, respectively.
Interestingly, general category entrepreneurs across the States dominate the loan chart, receiving 45 per cent of loans followed by Other Backward Castes (23 per cent), Schedule Caste (18 per cent) and Scheduled Tribes (5 per cent).
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