PM SVANIDHI

1. Context

2. Why was this scheme rolled out?

• The COVID-19 pandemic and the nationwide lockdown left daily wage workers and street vendors out of work.
• The scheme aims at aiding the vendors in 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 of the central government schemes later.
• The scheme also attempts to formalize the informal sector of the economy and provide them with safety nets and a means of availing loans in the future.

3. Who is a street vendor?

• 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.
• The goods supplied by them include vegetables, fruits, ready-to-eat street food, tea, pakodas, bread, eggs, textile, apparel, artisan products, books/stationary, etc. and the services include barber shops, cobblers, pan shops, laundry services, etc.

4. What is the rationale of the scheme?

• The COVID-19 pandemic and consequent lockdowns have adversely impacted the livelihoods of street vendors.
• They usually work with a small capital base, which they might have consumed during the lockdown.
• Therefore, credit for working capital to street vendors will be helpful to resume their livelihoods.

5. What are the objectives of the scheme?

• To incentivize regular repayment of loans; and 
• to reward digital transactions.

6. What are the salient features of the scheme?

• Initial working capital of up to 10,000/-
• Interest subsidy on timely/early repayment @ 7%.
• Monthly cash-back incentive on digital transactions
• Higher loan eligibility on timely repayment of the first loan

7. Eligibility criteria of the beneficiaries

• The Scheme is available to all street vendors engaged in vending in urban areas *. The eligible vendors will be identified as per the following criteria:
• Street vendors in possession of a Certificate of Vending / Identity Card issued by Urban Local Bodies (ULBs);
• The vendors, who have been identified in the survey but have not been issued a Certificate of Vending / Identity Card; a Provisional Certificate of Vending would be generated for such vendors through an IT-based Platform. ULBs are encouraged to issue such vendors the permanent Certificate of Vending and Identification Card immediately and positively within one month.
• Street vendors left out of the ULB-led identification survey or who have started vending after completion of the survey and have been issued a Letter of Recommendation (LoR) to that effect by the ULB/ Town Vending Committee (TVC); and 
• The vendors of surrounding development/peri-urban/ rural areas vending in the geographical limits of the ULBs have been issued a Letter of Recommendation (LoR) to that effect by the ULB/TVC.

• The list of vendors, prepared by certain States/ UTs, for providing one-time assistance during the period of lockdown; OR
• A system-generated request was sent to ULBs/ TVCs for the issue of LoR based on the recommendation of the Lender after verifying the credentials of the applicant; OR
• The membership details with the vendor's associations including the National Association of Street Vendors of India (NASVI)/ National Hawkers Federation (NHF)/ Self-Employed Women’s Association (SEWA) etc.; OR (iv) The documents in possession of the vendor buttressing his claim of vending; OR (v) Report of local inquiry conducted by ULB/ TVC involving Self-Help Groups (SHGs), Community-Based Organizations (CBOs), etc. ULB shall complete the verification and issuance of LoR within 15 days of the submission of the application. 
• Further, ULBs may adopt any other alternate way for identifying such vendors to ensure that all the eligible vendors are positively covered.
• vendors who have gone back to their native places due to COVID-19 Some of the identified/surveyed or other vendors who have been vending/hawking in urban areas have left for their native places before or during the lockdown period because of the COVID-19 pandemic. Such vendors are likely to come back after the situation normalizes and resume their business. 

7. Why is such a study needed?

• The scheme plans to extend the microcredit to over 50 lakh street vendors across India, which is the estimated number of hawkers as per various urban local bodies.
• But, going beyond the mandate of this scheme, the government wants to use the data for comprehensive poverty alleviation.
• However, there is hardly any comprehensive structured data on the socio-economic profile of street vendors and the street vending economy in India, even in government surveys like the National Sample Survey Organisation (NSSO) and the Economic Survey.
• The NSSO, for instance, has defined street vendors through a category of “enterprises without fixed premises” among “Unincorporated Non-Agricultural Enterprises (excluding construction)”, in its 67-68th round report published in 2011- 12. 
• The NSSO data estimated that around 200,000 women and 21,500 children were engaged in street vending. Around 1.18 million households were dependent on this sector as their primary source of income, according to a paper by the think-tank Observer Research Foundation.
• Non-governmental organizations and research by scholars have attempted to put together this kind of data several times in the past in bits and pieces.

8. Will this scheme actually work towards poverty alleviation?

• Becoming formal beneficiaries of various government schemes works as a big step towards entering the policy intervention network.
• Officials say it also helps in financial mainstreaming in the long run.
• For example, several banks, bereft of the prior experience of extending loans as little as Rs. 10,000 to someone like a street vendor, are following processes like checking the CIBIL score for the street vendor and seeking PAN card and IT-return, etc.
• While these cases are dealt with as hurdles on the ground, it is a fact that street vendors hardly have creditworthiness in the eyes of India's formal banking system.
• Therefore, the PMSVANidhi is incentivizing digital transactions by street vendors. They will soon be given QR codes to receive payments through the government’s BHIM UPI app.
• They are given cash back for digital transactions too. The idea is that with a trail of digital transactions against their names, they will create a formal transaction history in banks and will slowly build their creditworthiness for the future.