PM SVANidhi Yojana, 2020

Policy Update
Anamitra Sinha

Background

The Pradhan Mantri Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) scheme, launched on June 1, 2020, by the Ministry of Housing and Urban Affairs (MoHUA), emerged as a lifeline for street vendors impacted by the COVID-19 pandemic. Recognizing the indispensable role of street vendors in urban economies and their heightened vulnerability during economic disruptions, the scheme was conceived as part of the broader ‘AtmaNirbhar Bharat’ initiative, focusing on self-reliance and economic resilience.

Targeting 50 lakh street vendors operational as of March 24, 2020, PM SVANidhi provides collateral-free loans to help vendors revive their businesses. In its first phase, the scheme offered loans of up to ₹10,000 with a tenure of one year, enabling vendors to restart their livelihoods with minimal financial burden. For those demonstrating timely repayment and good credit behavior, the scheme further extended support through a second tranche of up to ₹20,000 and a third tranche of up to ₹50,000, thereby incentivizing financial discipline.

A notable feature of PM SVANidhi is its emphasis on fostering digital financial inclusion. By encouraging vendors to adopt digital payment systems, the scheme not only facilitates smoother transactions but also integrates this traditionally unorganized sector into formal financial networks. This innovative approach ensures that vendors—whether they sell textiles, artisan products, food items, or provide essential services like barbering and laundry—gain access to sustainable financial growth.

PM SVANidhi underscores the government’s commitment to rebuilding livelihoods in the informal sector while driving long-term policy transformations. Beyond being an immediate economic stimulus, it lays the foundation for inclusive growth by empowering street vendors, the backbone of urban economies, to regain their independence and thrive in a post-pandemic world.

Functioning

The PM SVANidhi Scheme operates with a focus on reviving the livelihoods of street vendors through accessible credit and fostering their integration into the formal financial ecosystem. At its heart lies the intent to empower vendors, many of whom were significantly affected by the COVID-19 pandemic, by providing an initial loan of ₹10,000 without collateral. This capital enables vendors to restart their businesses with reduced financial stress, supported by provisions for increased loan amounts upon timely repayment.

Applications for the scheme are streamlined through a digital platform, ensuring convenience and accessibility. Street vendors can apply via an online portal or through assisted setups at Common Service Centers. The process emphasizes inclusivity, extending eligibility to those with a Certificate of Vending, a Letter of Recommendation, or a provisional identity issued by Urban Local Bodies (ULBs). By leveraging the extensive network of participating financial institutions, such as scheduled commercial banks, regional rural banks, and non-banking financial companies, the scheme ensures broad coverage.

A key feature is its integration of digital payment systems. Beneficiaries are incentivized with monthly cashbacks for adopting cashless transactions, reinforcing a shift towards formalized banking channels. These efforts not only modernize their operations but also contribute to building a credit history, enhancing their financial credibility for future loans of higher amounts.

Capacity-building programs further strengthen the initiative. Collaborative efforts between the Ministry of Housing and Urban Affairs (MoHUA) and state governments ensure vendors receive training in financial literacy and effective loan utilization. This human-centered approach aims to instill confidence and self-reliance among vendors.

By combining credit access, digital empowerment, and capacity building, PM SVANidhi exemplifies a holistic framework for economic recovery and social upliftment, fostering resilience in one of the most vulnerable segments of society.

Impact

The PM SVANidhi scheme has had transformative effects on the livelihoods of street vendors and the broader urban economy. As of 2024, it has disbursed over 80.42 lakh loans, amounting to ₹10,678 crores, directly supporting more than 60 lakh street vendors across urban, peri-urban, and rural areas​. The scheme provided critical financial aid during the pandemic, enabling vendors to restart their businesses and contribute to local economic activity.

By encouraging digital transactions, PM SVANidhi has promoted financial inclusion, bringing a large number of informal vendors into the formal banking system. With monthly cashback incentives of up to ₹100, many beneficiaries have adopted cashless payment methods, enhancing their integration into the digital economy. Additionally, nearly 41% of vendors who repaid their initial loans on time have successfully availed of higher credit limits, empowering them to scale their operations​

The scheme also indirectly improves social security for street vendors by reducing dependency on exploitative informal lenders and ensuring access to institutional credit. The establishment of formal financial records has strengthened their creditworthiness, opening pathways to further economic opportunities.

However, challenges such as limited awareness and accessibility in some regions persist. Despite these, PM SVANidhi remains a pivotal initiative, fostering resilience, inclusion, and sustainable growth among street vendors, while aligning with the government’s broader goal of building an AtmaNirbhar Bharat.

Way Forward

To fully realize the potential of PM SVANidhi, a multi-pronged approach is essential. First, raising awareness about the scheme through targeted campaigns in underserved areas can ensure more street vendors benefit from its provisions. Simplifying the application process and providing on-ground assistance, particularly for marginalized groups, would enhance accessibility and coverage. Strengthening urban infrastructure, such as creating designated vending zones and improving waste management, is vital for supporting vendors sustainably while balancing urban development​

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Digital literacy programs should be scaled up to help vendors maximize the benefits of digital transactions. These programs can be integrated with capacity-building initiatives, equipping vendors with the tools to navigate the formal financial system confidently. Additionally, expanding the scope of the scheme to provide health insurance or pension benefits would enhance vendors’ social security, ensuring long-term resilience against economic shocks.

In conclusion, PM SVANidhi has been a lifeline for millions of street vendors, fostering economic revival and financial inclusion. However, its success also highlights the need for systemic reforms to address the vulnerabilities of the informal economy. By focusing on inclusivity, robust infrastructure, and long-term support systems, the scheme can serve as a model for empowering unorganized sectors and building a truly self-reliant India. The program’s impact underscores the value of integrating social and economic goals, offering lessons for future policymaking aimed at inclusive growth.

References

About the Contributor: Anamitra Sinha, Policy Research Intern at IMPRI Institute and Master’s student in Development, Policy Planning, and Practice at Tata Institute of Social Science, School of Rural Development, Tuljapur (Off-Campus).

Acknowledgment: This article was reviewed by IMPRI experts and other collaborators.

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