Government Boosts Entrepreneurial Funding with Enhanced Mudra Loan Scheme
- Business Economy
The Time Press
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- 6 minutes read
“Tarun Plus: What It Means for Small Businesses?”
Date: October 25, 2024 In a significant move to bolster India’s micro and small enterprise sector, Finance Minister Nirmala Sitharaman announced during the Union Budget 2024-25 in July an increase in the loan limit under the Pradhan Mantri Mudra Yojana (PMMY) from ₹10 lakh to ₹20 lakh. This enhancement, effective immediately, introduces the ‘Tarun Plus’ category, targeting seasoned entrepreneurs who have successfully repaid their previous Mudra loans under the Tarun category.
The Department of Financial Services highlighted through social media that this new category will provide loans ranging from ₹10 lakh to ₹20 lakh, aiming to empower entrepreneurs to expand their ventures further. This initiative not only reflects the government’s commitment to fostering a robust entrepreneurial ecosystem but also aims at ‘Funding the Unfunded’—a core objective of the Mudra Scheme.
Moreover, the decision to cover loans up to ₹20 lakh under the Credit Guarantee Fund for Micro Units (CGFMU) is expected to ease access to finance for small businesses by mitigating credit risks for lending institutions. This move is anticipated to encourage more banks and financial institutions to lend to micro and small enterprises without significant collateral requirements.
Impact on Entrepreneurship:
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Increased Access to Capital: Entrepreneurs can now access double the amount of funding, potentially leading to greater business expansion and job creation.
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Credit Risk Mitigation: With loans up to ₹20 lakh covered by CGFMU, lenders might feel more secure, potentially reducing interest rates or easing credit terms.
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Economic Growth: Enhanced credit availability could stimulate economic activity, particularly in rural and semi-urban areas where micro-enterprises are predominant.
Public and Expert Reaction:
https://twitter.com/AstroSehlvi/status/1849779822429368441
The announcement has been met with enthusiasm across various platforms, with X users like @AstroSehlvi celebrating the move as a boost for aspiring entrepreneurs. However, skepticism exists, as noted by @NorbertBanker, questioning the immediate eligibility due to the prerequisite of prior loan repayment.
https://twitter.com/NorbertBanker/status/1849629695597556177
Economic Analysts’ Perspective:
Analysts believe this could lead to a surge in entrepreneurship, particularly benefiting sectors like agriculture, manufacturing, and service industries. However, they also caution that the effectiveness would heavily depend on the implementation and awareness among potential beneficiaries.
