“We need to enhance credit. If social capital is strong, we can expect economy to be strong,” a senior government official, aware of the deliberations, told ET. According to the official, the community-based recovery mechanism under NRLM and sanctioning of loans post availability of detailed micro-credit plan had considerably brought down NPAs under the scheme, “instilling confidence that we can consider enhancing the collateral-free loan”.
Government data show the loans disbursed under the scheme had gone up nearly threefold to Rs 66,925.46 crore in 2018-19 from Rs 23,316.34 crore in 2013-14. The figure is expected to cross Rs 95,000 crore in the current financial year. While the disbursals have increased, the NPAs have dropped to Rs 1,697.48 crore in 2018-19 (2% of the current outstanding amount) from Rs 2,932.67 crore in 2013-14 (6.83% of the outstanding amount).
The UK Sinha-led committee on micro, medium and small enterprises had in June this year recommended that the government increase the limit of collateral-free loan to Rs 20 lakh for selfhelp group-based enterprises as well as under the Pradhan Mantri Mudra Yojana, citing price rise. More credit in the rural economy would help spur economic activity.
Growth in the Indian economy slowed to a six-year low of 4.5% in July-September quarter. Launched in April 2013, the National Rural Livelihoods Mission is a poverty-reduction scheme that seeks to build strong institutions of the poor, particularly women, and enable these institutions to access a range of financial and livelihood services.