Country Snapshot: India’s loan scheme for street vendors

By StreetNet International
August 31, 2020
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In June 2020, the Indian government launched the Pradhan Mantri Street
Vendor’s AtmaNirbhar Nidhi scheme (or PM SVANidhi Scheme, for short), funded by
the Ministry of Housing and Urban Affairs. The goal of this scheme, according
to Prime-Minister Modi, to promote the holistic development
and economic upliftment of street vendors

Amar Kharate, StreetNet International organizer for the Asia Region, explains what exactly this policy entails, why it is important and its limitations.

What is the scheme?

The goal of this scheme is to provide a one-time loan up to Rs. 10,000
(US$134) to street vendors.

PMSVANidhi scheme allows them to continue their operations during the
economic hardships brought about by the COVID-19 pandemic, and also to invest
in digital transformation.

According to the guidelines presented on the online portal, the objectives of the PM SVANidhi Scheme are as follows:

  • To facilitate working capital loan up to Rs. 10,000
  • To incentivize regular repayment; and
  • To reward digital transactions.

The policy is implemented digitally precisely to avoid face-to-face
interactions due to the pandemic.

This scheme will be implemented until March, 2022.

Criteria for eligibility:

  • Street vendors registered under the Street Vendors Act of
  • Engaged in vending on or before March 24, 2020
  • They can apply for a loan through an online portal or app.
  • Eligibility also depends upon the vendor registration
    status, covered under survey or not, residing in rural areas or surrounding
    development areas, etc.

Documents to be submitted through online portal depends upon the vendor
status as defined below:

Category A:  Vendors
covered under the survey of Urban Local Body (ULB)

  • Issued Certificate of Vending (CoV) or Identity card (ID Card) by ULB or the Town Vending Committee.
  • has not been issued Certificate of Vending or Identity card by the ULB or the Town Vending. Survey reference number (SRN) needs to be mentioned.

Category B: Street vendors
who have started vending after completion of the survey ( left out of the
ULB-led identification survey) and Street vendors of surrounding development/
peri-urban / rural areas vending in the geographical limits of the ULBs (not
covered in Survey)

  • Vendor has been issued Letter of Recommendation
    by ULB/ TVC
  • Vendor has not been issued LoR – vendor
    declaration is required for either of the two:

    • Vendor has received One Time assistance during
      Covid lockdown
    • Vendor is a member of a vendors or hawkers’ association.

Along with above documents, basic identity documents such as Aadhar card
and voter id card have to be submitted mandatorily.

Aadhar card is linked to their registered mobile number on which they
receive OTP for verification of application else the registration process
cannot be completed

If their application is sanctioned, they will receive an annual loan up to
INR. 10,000 (US$134) within 30 days which needs to be paid back in monthly
installments. The loan requires no collateral and vendors will not be charged
any prepayment penalty if they manage to repay before the scheduled date.

So far, the online portal has already received 614,633 applications, of
which 145,445 (as on 21st August 2020 at 18:48 IST) have already
been sanctioned. SEWA alone has at least 20,000 applications of their members.

Why is this scheme important?

From Amar’s point of view, this scheme is important because it allows
the organizations such as SEWA to be heard by policy makers who have been
calling for social protection measures.

The Self-Employed Women’s Association (SEWA) is a
trade union and an affiliate of StreetNet International. Registered in 1972, it
organizes poor, self-employed women workers who own labour or small businesses
in the informal economy. SEWA is one of the most vocal organizations fighting
for the rights of informal economy workers and for the recognition of the value
of their labor.

The scheme was extended to street vendors who are members of vendors’ or
hawkers’ associations, which is why SEWA’s members have benefited greatly from
this scheme.

Street vendors have been organizing since the beginning of the crisis to
demand support and be recognized as important economic agents. Through this scheme
created specifically for street vendors, they are gaining more recognition and
their collective demands are being taken seriously.

It is also a vital support for street vendors who are struggling to
generate income and would otherwise have no access to bank loans and other
financial instruments. However, this scheme is not as ambitious as vendors
wished it was.

What are the limitations?

First of all, because it is a loan, it means it will have to be repaid.
The annual interest rate is as high as 24% with an Interest subsidy of 7% based
on the criteria of regular repayments without missing out on any EMIs. Clearly,
this is a heavy burden for vendors who struggle to generate income during this
crisis and are living hand to mouth.

Furthermore, the loan scheme does not take into account the particular circumstances of each vendor. Whether the vendor has a family or not, for example, the amount is always the same.

It is also a temporary measurement, distributed only once. This means vendors will have to manage this amount and cannot expect to receive more in the future – although the online portal does state that vendors who manage to repay the loan may be eligible for future, larger loans as well.

Then, although the scheme can reach thousands of people, it still excludes large segments of street vendors. Namely, those who are not registered – for several reasons – and those who do not have access to smartphone or internet.

In addition, application form and procedure are in English, therefore excluding people who cannot understand this language.

Due to these factors, SEWA, for example, had to assist many applicants
in asking for the loan because they were not able to do it themselves.

Amar also points out a lack of transparency in the whole process – it is not clear who will and who will not receive the loan after submitting the application because the percentage of sanctioned applications is below 25%, even when vendors have followed all the steps. Therefore, a reason for rejection should be provided.

Instead of a loan scheme, direct grants given to street vendors might
have proved more beneficial. However, Amar points out, the challenge with receiving
such direct grants is that they usually are based on certain eligibility
criteria but specifically not as worker criteria. Therefore, a specific grant
would need to be created.

Why is this scheme relevant for StreetNet

This scheme is relevant for StreetNet
International for two main reasons:

First, it demonstrates how mobilized vendors can influence policy makers. If it was not for the intervention of organizations such as SEWA, it is unlikely that the Indian government would put forward a scheme to support street vendors. Such inclusion of the voices of informal economy workers align with StreetNet’s principle of Nothing for Us, Without Us;

Secondly, it is an example of an emergency scheme designed specifically for street vendors, an important step to recognizing their contribution to social and economic development. Although StreetNet favors basic emergency living cash grants to tackle the consequences of COVID-19, the loan scheme is still important to promote the financial inclusion of street vendors.

Type of article
SEWA (Self-Employed Women’s Association)