This issue of INCLUSION comes to you at the completion of two years of Modi government and also after the histrionics of electronic media anchors and reams of newsprint about glamorous stuff, which is behind us. This issue looks at what have been the real big achievements that will impact the future course of inclusive growth in/of India. The real dark horse is the MUDRA scheme that may do away with financial exclusion forever, while being job generative as well as covering and addressing the problems of marginalised sections of the society better. Given that our banking system has failed to offer credit to the people who need it, consistently for sixty years, MUDRA has succeeded by taking into its fold NBFC-MFIs, which outshine banks on every parameter per se. Given that 3.2 crore loans out of 3.44 crore given under MUDRA are sub Rs 50,000, the credit is reaching really the bottom of the pyramid. My analysis on MUDRA also brings out the pitfalls and cautions against potential reasons that may lead to its failure.
Credit to MSMEs who require far more than Rs 10,00,000, available under MUDRA remains a disaster area. Additionally, being at the lower-end of the food chain, most large organisations have been either delaying or defaulting on MSME payments, making them starve for working capital for no fault of theirs. RBI is ruthlessly classifying them as NPAs instead of giving a longer time to repay and making working capital available. Barring strong language, there seems to be merit in arguments of Subramaniam Swamy against RBI and the impact it has had on MSMEs. Agricultural credit and SHG formation are other such neglected area.
Having said that, Ministry of Finance has done a brilliant job of bringing the economy back from the brink. Not many are aware of how precarious the situation was when the government switched hand—but for the course correctives, the aftermath could have been nearly as bad as the 1991 crisis.
Whether it is coal block auction, levying of anti-dumping duty on steel, augmenting the production capacities by modernising the steel plants, auction of mines, availability of sufficient quantity of coal to power plants, straight-through processing of files, empowering the lower rungs of officers to take decisions across ministries or upping the investment in boosting infrastructure at the government level, on the one hand or providing social security (life/accidental insurance and pensions), banking access to all, improving the credit linkage or making LPG available to over 1 crore households at the common man level on the other, the list of ‘firsts’ is quite huge. Nevertheless, there are always ‘Hits & Misses’ and this issue brings out these too.