Mudra’s New Chapter: Strengthening Grassroots Entrepreneurship in India

🧭 Thematic Focus

Category: Economy | Financial Inclusion | Government Schemes
GS Paper: GS Paper III – Inclusive Growth | MSME Sector | Financial Institutions
Tagline: When capital meets courage, small hands build grand dreams.

🌱 Intro

As the Pradhan Mantri Mudra Yojana (PMMY) completes another year, it continues to act as a pillar of micro-entrepreneurship in India.
Despite a slight rise in Gross Non-Performing Assets (GNPA) to 2.21% in 2024–25, the scheme remains a beacon of inclusive financial empowerment.

🔍 Key Highlights

🏦 What Is PMMY?

• Launched: April 8, 2015
• Offers collateral-free loans up to ₹20 lakh
• Target audience: micro units, non-corporate small businesses
• Sectors: Manufacturing, Services, Trading

💰 Loan Categories

• Shishu: Up to ₹50,000 (early-stage)
• Kishore: ₹50,000 – ₹5 lakh (growth-phase)
• Tarun: ₹5 lakh – ₹10 lakh
• Tarun Plus (Oct 2024):
  • For borrowers with good repayment history under Tarun
  • Increased limit: up to ₹20 lakh
  • Reached 25,000+ beneficiaries, ₹3,790 crore in disbursements

👩‍🌾 Gender & Social Inclusion

• 68% of loans to women entrepreneurs
• 50% allocated to SC/ST/OBC communities
• Reflects priority for marginalised, underrepresented groups

📈 Financial Performance

• Total loans sanctioned: 52.37 crore
• Total value: ₹33.65 lakh crore
• Avg loan size grew: ₹40,000 → ₹1.05 lakh
• GNPA:
  • 2020–21 peak: 3.61%
  • 2023–24: 2.1%
  • 2024–25: 2.21% (slight rise, still manageable)

🎯 Future Targets

• Disbursement goal for 2025–26: ₹5–6 lakh crore
• Focus on Tarun Plus scaling, better targeting, NPA management

🏛️ Lending Ecosystem – Member Lending Institutions (MLIs)

Loans provided through:

• Scheduled Commercial Banks
• Regional Rural Banks (RRBs)
• Small Finance Banks
• NBFCs & MFIs
• Multichannel access ensures deep rural penetration

🧠 Concept Explainer: Why This Matters

PMMY is not merely a loan scheme—it is a trust signal to the informal economy.
Its success lies not just in funds disbursed but in dignity returned to the smallest dreamers.
A mild rise in GNPA must be met with financial literacy and ecosystem support, not rollback.

🗺️ GS Paper Mapping

• GS Paper III – Inclusive Growth, Financial Sector Reforms, Government Schemes
• GS Paper II – Social Justice | Women & SC/ST/OBC Welfare
• Essay Themes – “Small Loans, Big Hopes,” “Empowering India, One Shishu at a Time”

💭 A Thought Spark — by IAS Monk

“Not all wealth starts in vaults—
some begin in hands dusted with flour,
tools crusted with labour,
and hearts wired for flight.”