Current Affairs

Issue

The government has been making efforts to increase the ambit of PM SVANidhi scheme, which aims to secure livelihood of street vendors.

 

Details

• The PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) scheme is a micro-credit facility that provides street vendors a collateral-free loan of Rs 10,000 with low rates of interest for a period of one year.

• A vendor, according to the scheme guidelines is any person engaged in vending of articles, goods, wares, food items or merchandise of daily use or offering services to the public in a street, footpath, pavement etc., from a temporary built up structure or by moving from place to place.

 

Objectives of the scheme

• The scheme aims at aiding the street vendors, who were affected by the pandemic, at getting back on their feet financially.

• In the long term, it aims at establishing a credit score for the vendors as well as creating a digital record of their socio-economic status, so that they can avail the Central government schemes later.

• The scheme also attempts to formalise the informal sector of the economy and provide them safety nets and a means of availing loans in the future.

 

Importance

• Many vendors belong to the informal economy, and often borrow from private lenders which charge them exorbitant rates of interest.

• This loan charges below 12% rate of interest, and creates a credit score of the vendors, so that if they repay the loan on time, they can avail more.

• Moreover, by creating a digital record of them and their socio-economic profile, it will help them avail various other 8-9 central government schemes which provide a form of a safety net, helping in their poverty alleviation.

 

Eligibility

• All vendors who have been vending from or before March 24, 2020 and with a certificate of vending can avail the loan.

• As per the Street Vendors Act of 2014, the Town Vending Committees (which comprises the local authorities and vendors from an area) issue a certificate of vending after a survey has been conducted of all the vendors.

• The documents, including the identification proof, are uploaded on a special portal made for the scheme, and the loans are sanctioned by banks and disbursed, ideally, in 10-15 days.

 

Benefits

• Vendors can avail a working capital loan of up to Rs. 10,000, which is repayable in monthly instalments in the tenure of one year.

• On timely/ early repayment of the loan, an interest subsidy @ 7% per annum will be credited to the bank accounts of beneficiaries through Direct Benefit Transfer on quarterly basis.

• There will be no penalty on early repayment of loan.

• The scheme promotes digital transactions through cash back incentives up to an amount of Rs. 100 per month.

• The vendors can avail the facility of escalation of the credit limit on timely/ early repayment of loan.

 

Challenges in implementation

• States across the country have unevenly implemented the Street Vendors Act of 2014, which necessitates a survey of the vendors to provide them with a certificate of vending.

• Some municipalities are also slow in issuing LORs, which has kept hundreds of vendors waiting for the loan for months or even getting denied. 

• A second issue was that mobile numbers of various vendors were not linked with their Aadhar cards. To address this, various ULBs have now set up camps. 

 

Current status

• Currently, Hyderabad has seen the highest number of applications and disbursement rates. Bengaluru, Mumbai, Chennai, Delhi, and Kolkata are ranked next in the order.

• Telangana, Andhra Pradesh, Uttar Pradesh, and Madhya Pradesh are among the better performing states, which have also provided certificates of vending either before the pandemic or in the past few months.