PM SVANidhi scheme for street vendors

ECONOMY/ GOVERNANCE

Topic: General Studies 2,3:

• Indian Economy and issues relating to planning, mobilization, of resources, growth, development.
• Government policies and interventions for development in various sectors and issues arising out of their design and implementation

PM SVANidhi scheme for street vendors

Context: The PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) scheme was launched in June amid the pandemic.

What is the scheme all about?

• It 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.
• So far (Dec 2020), the scheme – part of the AtmaNirbhar Bharat package – has received 31.6 Lakh applications from across the country (except from Sikkim, which is officially not taking part in it). 
• Of the total applications, 16.7 Lakh have been sanctioned and 12.17 Lakh have been disbursed.

Why was this scheme rolled out?

• To deal with Impact of Pandemic & Lockdown: The COVID-19 pandemic and the nationwide lockdown disrupted the business cycle and left daily wage workers & street vendors out of work. The scheme aims at aiding the vendors at getting back on their feet financially. 
• Establishing Credit Score & Digital Record: 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. 
• Prevents Debt Trap: Many vendors belong to what we call 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 helps prevent street vendors from falling into debt trap.
• Formalisation of Economy: 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.

Which vendors are eligible for the loan, and how do they apply for it?

• 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.
• But since many states and cities have not conducted the survey yet, many vendors are unable to provide any such certificate of vending. Instead, as per scheme, the urban local bodies – in this case, the municipalities – shall provide a Letter of Recommendation (LOR) for every vendor who wishes to avail the loan.
• If the vendor is a member of a vendor association, he or she can apply,
• These 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.

Does the scheme legitimise vending of the applicants if the city has not conducted a Town Vending Committee survey as per the Act?

• Once 
• Letter Of Recommendation is issued by the ULBs, its mandate lasts a month, after which the survey for the issuance of the certificate of vending should be undertaken by the ULBs. 
• But since it is a state subject, the central government can only direct or sensitise the state governments on the importance of doing so, and not evicting vendors who have availed the loan but do not have a certificate.
• The LORs issued by the ULB do not give any legal authorisation or rights for vending, as this is not mentioned by the scheme

What are the various challenges that vendors are facing while applying for the loan?

Even though the scheme has received a tremendous response from vendors across the country, certain areas lag others when it comes to its implementation due to various factors.

• City-wide survey of vendors is lacking: 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.

• Delay in issuing LORs: Due to lack of comprehensive data, the vendors must first apply for a Letter of Recommendation (LORs) from the ULBs, which tends to not only delay the entire process, but can also lead to the application being rejected. Some municipalities are also slow in issuing LORs, which has kept hundreds of vendors waiting for the loan for months
• Linkage with Aadhar: Another 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. Many vendor associations are also setting up camps at markets to rectify this issue and also help the vendors in the online application process.
• Mindset of local authorities against vendors: Various vendors who have received the loans are often evicted from their place by either the police or by the ULB officials, hitting their only source of income and their ability to repay the loan.
• Regional Imbalance in disbursement of loans: Telangana, Andhra Pradesh, Uttar Pradesh, and Madhya Pradesh are among the better performing states, which have provided certificates of vending either before the pandemic or in the past few months. Other states are lagging behind.

Conclusion

Even though the scheme has received a tremendous response from vendors across the country, certain areas lag others when it comes to its implementation due to various factors.

Connecting the dots:

• Atmanirbhar Bharat