Nov 062015
 

Is Politics prevailing instead of Economics 

The Mudra Bank Yojana has congregated a lot of praise through its rapid progression. The Finance Minister of India, Arun Jaitley claimed that Mudra Bank Yojana had already progressed over RS 24,000 Crore to over 3.7 Million micro enterprises. Mr. Arun expected the Yojana to progress over RS 1.2 Lakh Crore to more than 12.5 Million pledgers by the end of the current financial year. This is a wonderful achievement for India, if we go through the statistics. This is a praiseworthy record by the ideals of India’s public institutions. It is also going at par with PM’s Jan Dhan Yojana. Mudra Bank Yojana was launched on April 8, 2015 to provide loans to small businessmen.

Politics over economics

In recent news, it has been learnt that Mudra Bank could miss its 2015-16 targets as it has only achieved 30 percent of its target in the first half of the economical year. The Mudra Bank has paid about RS 37,000 Crore to more than 60 lakhs businesspersons in the first seven months of the current year. The ministers were involved in a countrywide promotion of the Mudra Bank scheme from September 25 to October 2 to spread the Mudra message.

Mudra Bank may miss its target but still a payment of RS 37,000 Crore is also remarkable. Mudra Bank started with only RS 5,000 Crore of capital and it’s working as a subordinate of Small Industries Development Bank. But it has achieved disbursements from The State Bank of India and the five associates of it, 21 other public sector banks, 56 regional rural banks, 16 private sector banks and 2 foreign banks.

So, the Mudra Bank scheme may sound attractive politically for its disbursement but the major fact is all the money came from the banking sector and Mudra provided the marketing and branding only with the aid of the government. At a stage, Mudra has to deliver noteworthy refinancing to the banks. So, if we go through the facts stated above Mudra Bank Yojana is a questionable scheme and thus many questions have risen against it.

Mudra has maintained a variety in terms of lending institutions with the objective to make the scheme work properly. The public sector banks are especially passionate about Mudra. The noticeable absentee on the list of the disbursers are 36 Microfinance Institutions and 25 Non-Banking institutions who have signed with Mudra. The biggest MFI’s like Spandana, Asmitha haven’t even signed with Mudra. The MFI’s and the NBFC’S are unfriendly with Mudra because it entails lending rates of 1-18% for the MFI’s and 20-22% for the NBFC’. It is not a friendly rate to them. Thus, Mudra’s refinancing is unappealing to them.

The facts stated above subsidize the underprivileged economics of the Mudra Bank Yojana. There are loads of schemes and institutions in India associating the small traders and manufacturers. All of them needed to be brought under The Mudra scheme. But without even reforming the other schemes and reconstructing them Mudra scheme was presented to the people. The Mudra scheme induces the unemployed youths to get forms for loans from the party office without any security. All of the factors contribute to prove that currently politics is dominating The Mudra Bank Yojana instead of economics.

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