The atrocities caused by the Covid – 19 pandemic are endless for street vendors, but an initiative like SVANidhi brings a sense of security. It would be easy to say that the scheme itself was ideal to bring the necessary change for the functioning of the street vendors, however, what degree of Impact has the scheme brought in the lives of vendors is a crucial question, that must be discussed in detail. It would be further reflected in the article, that how various agencies have made the process more difficult than making it easy and accessible for the stakeholders.
Street vending means when people are engaged in selling or vending goods, articles, and food items and offering services to people from a temporary structure in a public or private area, or by moving from place to place. Street vending is an integral part of India’s urban economy. It has been estimated that vending consists of about 4% of the urban workforce and 14% of the total informal urban economy (IGSSS, 9). They provide essential goods and services at affordable rates.
The Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act 2014 aims to protect the livelihood and regulate the functioning of street vendors. This was a landmark decision as it established Town vending Committees (TVC) and Create Vending Zones which are to be surveyed by the TVC every 5 Years. (DFE, 4).
This Act also legislated the Vending Certificate which will be allotted to the vendors by the TVC, if there is an undertaking submitted by the vendor. This shall have numerous benefits as the place designated to them for vending would not be allotted to any other vendor. The main issue with the Act is its inconsistency in implementation, the non-allocation of certificates as planned, and unorganized distribution in the zones.
Street vendors are one of the most disadvantaged groups in society, as they struggle every day to earn and meet their basic daily needs (PRIMAX). In 2020, the vending sector was adversely hit by the Covid-19 pandemic, as the lockdowns restricted vending resulting in the basic needs of the family being unfulfilled.
Although they were permitted to sell essential goods during the lockdowns due to pressure from Vendor advocacy groups, the costs and risks were significantly high as the wholesale markets were relatively inaccessible with the travel cost and restrictions made it more difficult to function. Along with that, the crowd in markets and cities was significantly low. (Majithia). After the lockdowns, the problems did not get over for the street vendors, the low footfall turnout in the markets and hygiene was one of the significant issues for them. The pandemic has worsened their conditions and their lives with no income and pushed many into poverty.
In these challenging times, the government announced PM SVANidhi (Pradhan Mantri Street Vendor’s Atma Nirbhar Nidhi) in June 2020, which is a central sector scheme initiated by the Ministry of Housing and Urban Affairs. The scheme aims to provide a working capital loan of Rs. 10,000 to the vendors, who have been vending before 24th March 2020.
Some of the prime motives of the scheme along with providing a working capital loan were to make the vendors less reliable on the informal credit system and incentivize regular repayment along with digital transactions. However, multiple issues are faced by the street vendors to avail of the loan. This article would aim to assess the hurdles in the implementation and progress of the SVANidhi loan.
The Scheme and Implementation Process
As mentioned above, the scheme gives a loan of the sum of 10,000 for a year to the vendors at an interest subsidy of 7% on timely repayments. Along with that, the scheme also aims to incentivize digital payments through cashback, this digital payment record will help build a credit score for them which would be helpful for their future credit needs. The Chart for the Loan repayment, interest subsidy, and cashback has been given below for the sum of 10,000.
1.1 Source: PM SVANidhi Guidelines
The scheme is eligible to any vendor who is vending before 24th March 2020, but to avail of the same Vending certificate will play an essential role in the identification of the beneficiaries, which were given by TVC or the Urban Local Bodies (ULBs).
But if anyone is identified in the survey, and does not have the certificate, for them provisional certificates would be allotted through the online portal within one month of application. And at the last, the vendors who were left out of the survey will be given a Letter of Recommendation (LoR) by the TVC or ULBs (SVANidhi Guidelines).
The LoR was included in the scheme because there was a significant gap that was noticed between the estimates of the Vendors in the nation and the survey done by the TVC. Here we could actively notice the heavy reliance on the ULBs and TVC for the policy implication of the scheme, which was already highly inefficient.
This scheme aimed at providing the loan in 125 cities, to around 5 million vendors by March 2022 in the first phase, but afterward, it was extended to Dec 2024. The Loan is non-collateral based and would be provided by various banks and financial intuitions around the nation. The application process would be online, as well as they could use common service centres in most of the banks for the credit service.
The scheme itself has been divided into three terms, in the first term a loan of 10,000 would be given, and based on the timely repayment of the loan, the person would be eligible to apply for a loan under term two in which they could get a loan of 20,000. And based on the same method of timely repayments they could avail of a loan of 50,000 under term three.
This scheme could be a game changer for street vendors because not only does it provide a small-term working capital loan to get back on the working grid but also aimed at reducing their dependence on informal sources for loans.
The government is also working on another program called “SVANidhi se Samriddhi” which aims to link various welfare schemes with SVANidhi and to create a socio-economic database of the vendor and their family beneficiaries.
With the help of this, they would be able to extend their state-specific welfare schemes & benefits to the eligible PM SVANidhi beneficiaries and their families. (Ananya Tiwari, 2) This scheme is a huge leap in transitioning a huge chunk of the population from the informal sector to the formal and would help to create safety nets for the vulnerable (JK. Jha, 1).
Performance of the Scheme
Around 49.8 Lakh vendors were identified in the nation, who were eligible for the PM SVANidhi scheme, in which Uttar Pradesh and Madhya Pradesh have the highest number of vendors as of 3rd February 2022. But the thing to keep in mind is to keep a check on how many of these loans have been distributed.
1.2 Source: PMS Dashboard
As per the official dashboard, there are more than 54 Lakh applications who are eligible for the scheme, in which about 37 Lakh loans have been sanctioned, and around 11 lakhs applications have been identified as ineligible for the scheme, which is about 23 percent, which is significantly high. (PMS Dashboard)
This was questioned in the Standing committee for the PM SVANidhi. The failure rate of the application is so high because (i)the vendor is not interested in availing loan, (ii) LoR application is pending, and (iii) or insufficient documents were submitted by the Applicant. (PRS Executive summary).
1.3 Source: PMS Dashboard
Along with that if we bifurcate the available data, we can identify that about 59% male and 41% female were the beneficiates, which is way less than the sex ratio of the nation. But higher than the estimated female workforce in India by the World Bank which was at 20.3% in February 2022.
This shows how a great number of women are working and are a part of the informal workforce, especially vending. This could be an earnest effort for the government to provide welfare benefits to the women in the informal sector crucial to them, like access to better health and hygiene services.
As we discussed the bifurcation of the schemes under various terms, after noticing the government data, we could see that around 42.41 Lakh applications were there for term 1 and about 32 lakh loans were sanctioned. Only 6.8 Lakh applications were eligible for term two loans, for now. It is primarily because about 43% of applications that could be eligible for the term 2 loans are pending for RE KYC.
This was a similar case to the findings of the Standing committee report that about 50% of applications were pending for verification, RE KYC, and distribution of loans (PRS Executive summary). It could be noticed that that trend has not been changed based on the recommendation of the committee. The numbers for the term 3 loans are impressive as it is about 97% but it is too early to analyse the same as it is too small of a number.
1.4 Source: PMS Dashboard
Another part of the scheme was labeled “SVANidhi se SAMRIDHI” which was linking various government policies with this scheme as it would act like a Socio-economic database that would be helpful in the public delivery of various welfare schemes keeping the vendors and their families as the primary stakeholders. Other welfare schemes include – PM Suraksha Bima Yojana, PM Jeevan Jyoti Bima Yojana, PM Shram Yogi Mandhan Yojana, PM Jan Dhan Yojana, One Nation One Ration Card, Registration under BoCW, Janani Suraksha Yojana, and PM Matru Vandana Yojana.
The table below can easily reflect upon, that how are the families of the vendors who were not included in various schemes or were not aware of them, can get benefit from them. The number is quite insignificant compared to the number of loan issues but as this was a late inclusion in the policy, we can expect a better year-on-year growth towards increasing the accessibility of these policies.
1.5 Source: SVANidhi se Samridhi Portal
One of the essential components of the scheme which is missing is the Cashbacks – which were availed by the use of digital methods of payments and transactions like Net banking and UPI. These were helpful as they would decrease the cost of EMIs, and along with that, they would make the vendors digitally active. But according to the report of the standing committee, it was noticed that only about 25% of scheme beneficiaries are digitally active and the rest aren’t, this shattered the desired policy outcome of digital inclusion of vendors. (PRS Executive Report)
Implementation and issues
The main issue with this scheme is its implementation. It is an ambitious scheme to go ahead with, but the overdependence on Urban Local Bodies (ULB) and TVC have created a bridge between the desired outcome and the result. To get the loan, a person needs a vending certificate or an official document from the ULB, but the survey done by TVC has insufficient data and has left out many vendors.
This leads to the vendors in categories C and D, without the certificate. So, to get a loan they must apply for a Letter of Recommendation (LoR) from ULB but the process of attaining it is troublesome and very time-consuming.
A study shows about 75% of vendors are in C and D categories (IGSSS,23). Under the same study, it was reflected that 85% of the people who were aware of the scheme did not have their LoR. Therefore, applications without LoR are quite common in many cities. The above table 1.3 shows that about 11 Lakh applications are invalid and one of the primary reasons for the same is the lack of documents, such as LOR to be issued by the TVC and ULB.
Another issue in the implementation of the scheme is the banks. Rather than helping the beneficiaries, the banks are creating more challenges for them. It was noticed at various instances that the banks were asking for documents that were not required in the scheme like the ID of the spouse, address proof, etc.
It was also noticed that the banks were hesitant to give loans because most of the vendors are migrants and do not have proper documents and proof. Rather than that, a study done in Bengaluru based on the scheme noticed that the banks were hesitant to give the loans as it was their general attitude of them towards the vendors that they would be unsuccessful to repay the loan. (PRIMAX)
Whereas some of the financial institutions were referring to the CIBIL score of the vendors and based on that were giving the loans, because of many applications were rejected as most of the Vendors didn’t have a formal financial footprint which leads to a lesser score. Which would eventually leave no choice to the vendors except to take credit from the informal sector.
The standing committee on SVANidhi also recommended the institutions do away with the CIBIL score and re-examine the applications that were declined because of the low CIBIL score.
Along with that, it was also recommended to keep the documentary at the bare minimum for the stakeholders. (PRS Executive report) A trend was noticed that private banks have only given about 2% of the loans under SVANidhi. There are multiple reasons, but the majority believe that fear of collateral-free loans turning into non-performing assets is the major reason (Moshumi Das Gupta).
Understanding and Awareness: The biggest hurdles
Awareness and understanding are some essential objectives and without them, a policy could remain unseen by most stakeholders. This is where SVANidhi is going. A study was conducted in various cities in India, which showed that 52% of the vendors were not even aware of the scheme. The remaining 48% were aware of it, through sources like family, friends, or the media (DEF, 11).
Another study on similar lines reflected that about 39% of the vendors in Delhi did not know about the scheme either. The sources from which they heard were other street vendors, municipal authorities, and television. About 55% were not even aware that they were eligible for a loan under the same. It was asked by the people who knew whether they had applied for it or not and if not, they had to give justification for why they had not applied.
The most common answers were ‘no help in the application process, ‘do not know how to apply, and ‘will not be able to repay. The biggest issue was the documents as it was not clear what documents were to be submitted because of a lack of guidance. The system of the application was online, so it was difficult for many due to a lack of digital literacy. It was found that who helped the people who got the loan, it was shown that the municipality, and the hawker union played a significant role in helping them, but the help was extended to a mere number of less than 10% of the survey.
Most stakeholders do not have any formal education, yet they were not guided by anyone properly to attain the loan (IGSSS,28-32). The difficulties that were created due to being unaware of the scheme were also faced by the banking institutions as most of them were often the first method of communication for the policy.
Research conducted based on personal interviews finds that the vendors did not have any basic or prior knowledge about the scheme, and it was recommended that government should take steps for the same.
The Policy is multi-objective, it tries to uplift them and at the same time tries to bring them under the formal sector, along with that tries to provide better welfare for their family and bring financial and digital literacy to them which would be the way forward for the future. But there are some gaps that the government could not access.
The scheme was launched at a time when the vendors needed direct welfare support and not a credit-based scheme, which only created loan repayment panic for them at the start as the business was not as usual. Another thing that was insensitive on the part of the government was that most of the vendors are illiterate and uneducated, and because of that most of the financial tools are alien to them, rather many didn’t even have a proper bank account.
So, the goals like financial and digital literacy along with welfare benefit them based upon the adoption of payment methods like UPI and banking, made it very difficult for them to cope with the scheme and avail the welfare benefits.
A survey based on street vendors in Bengaluru, tells us that some of the primary demands of the street vendors themselves were to make the application process easier and more accessible to them or create awareness about it, even in the slums which have a high concentration of street vendors which are often left out. With that, the government process is very time-consuming and because of that, they must leave their daily earnings.
Apart from this, the above hypothesis represents a visible lack of implementation and a knowledge gap. And along with that, another thing that is required is to build a relationship of mutual respect and trust among the banking institutions and the Vendors for smooth delivery of the scheme.
The Banking Institutions should go ahead with the recommendation of the standing committee of minimal documentation and identities, along with the ignorance of the CIBIL score, and should reassess the applications which were deflected, ignored, or rejected t To build confidence among the banks and the vendors holding awareness-based events and seminars for the vendors. Not only would this promote the services of the bank but would be able to contribute to CSR which is directed towards the vendors.
Remove the accessibility barrier – Major institutions at a local urban level – Municipality, Town Vending Committee, and other urban bodies should make a separate working group, which will extend and look after the issues at a micro level for more accessibility.
These working groups could play an essential part in bridging the knowledge gap and promoting greater awareness Further, the inclusion of non-governmental organizations would make it more accessible to people. These groups could also play a role in keeping the implementation in check, based on the new regulation on the standing committee, The loan processing, and the required paperwork should be minimal as was suggested but along with that, the process should be rapid as the vendor should not suffer the loss of his hard-earned daily wage.
Act against the rejection of LoR and Loans – The same working group could also work as an advocacy group or rather a separate one could be created which would look after and assist them in taking legal action against anyone who declines to give out the loan or the LoR without any valid reason or keeps them pending for the same which is a condition in various places.
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About the Author
Ayush Aggarwal is a Visting Researcher and Assistant Editor at IMPRI, who is pursuing his Bachelor’s in Political Science from Ramjas College, University of Delhi.