They are the self-employed start-ups whose numbers are growing. Investing in them, not venture capitalists and angel funds but microfinance institutes (MFIs), a range of other financial bodies and, since 2015, MUDRA or Micro Units Development and Refinance Agency set up by the government of India.
All good so far. In the first two years of its existence, Mudra has refinanced loans given by MFIs to the tune of about Rs 3 lakh crore. The number of loans given out in that period was about 7.45 crore.
Controversy erupted when BJP president Amit Shah claimed in July last year that Mudra had created 7.28 crore jobs in two years and Prime Minister Narendra Modi in his Independence Day speech said "millions and millions of youth" were getting self-employed and creating employment for "one, two or three persons."
But take the case of 42-year-old Kamala Mandal who sells sarees, bedsheets, salwars and kameez from her home in a not so posh part Beleghata in Kolkata. She started the business 15 years ago with a little money from her factory-going husband, tasted profit, got microfinance loans totaling of 50,000 rupees and has found a USP that has her business booming. She sells goods on instalment. Her customers can pay her back every week instead of one go. And they love it.
Kamala is a one-woman show. She goes alone to Burrabazar, Kolkata's wholesale market, buys clothes at wholesale rate and sells with a profit margin. She wants to expand her business but when it comes to employing someone to help, it's a no.
"When I expand, I won't take outside help. I will ask my daughter-in-law to chip in," she says. When asked if she will pay the daughter-in-law a salary, Kamala laughs it off.
Lata Biswas, 32, took over her husband's chicken shop when he fell ill and took a microfinance loan to add fish to her portfolio. Her loan burden is about 40,000 rupees right now. And there is no question of employing anyone to help as it would eat into her meagre profits.
"I have to spend money for my husband's treatment. I can't spare money for a salary for someone," Lata says. When she has to take her four-year-old son to school, her husband minds the shop.
Lata and Kamala's loans are Mudra loans via Arohan, an MFI. Lata makes 400 rupees on a good day. Kamala's sales are sporadic. Their businesses are so small, their turnover so slim, they don't quite reinforce the Prime Minister's Independence Day claims nor Amit Shah's about the Pradhan Mantri Mudra Yojana creating a job revolution.
Where did Mr Shah's 7.28 crore jobs and loans of Rs 3.17 lakh crore come from? Analysts suspect they were simply extrapolated from refinance figures on Mudra's website where, if you add the 2015 and 2016 figures, you get 7.45 crore loans worth Rs 3 lakh core which is almost the same as Mr Shah's claims. One loan equals one job at least. That seems to have been the inference.
In an official email, MUDRA told NDTV it has no job creation data. Mudra maintains a portal for online submission on progress made by lending institutions about Pradhan Mantri Mudra Yojana.
"However," Mudra said, "the portal does not capture data pertaining to creation of jobs. Hence the data is not available with MUDRA."
Yes indeed, say MFIs, but all borrowers must have an existing business. It is too risky to loan money without any collateral whatsoever, they say, to someone who does not have any business to show. So, an MFI loan does not directly create a new job. It gives money to upgrade an existing self-employment venture.
Swati and Joydev Mondal, for instance, produce resistance, a tiny mechanical part for table fans. 25 years ago, the unit had eight full time employees. Then business slumped. To revive it, Swati took loans - currently 45,000 rupees - but can't afford a single full time employee, only three to four part time labour.
"There is no monthly salary. I pay weekly wages only. Every week I pay them off." Swati said. "We have to manage somehow. I have no hopes of becoming a rich man. It is beyond me," said Joydeb. So, no signs of new job creation.
Leading MFIs don't discount job creation entirely but won't hazard a guess on how many. For instance, Arohan, one of the biggest NBFC MFIs in the country headquartered in Kolkata, has received Rs 75 crore re-financing from Mudra. With at money, it has given loans to 32,000 people. But on job creation, they are conservative.
"The idea of giving loans is not to start a new business but for them to grow. And in that growth process, they would hire more people. So on a rough estimate, at least in our portfolio, at least 50 per cent of that number of clients that we have touched would have probably employed one more person to help them with the business." Manoj Nambiar told NDTV.
So optimistically, that 75 crore rupee loan may have created 16,000 new jobs. But not definitely.
However, there is one huge positive Mudra is bringing to the table -- the interest on its refinance to MFIs. Village Financial Services, another major MFI in the eastern region, has just got a 15 crore loan from Mudra at 7.5 per cent interest, much lower than bank rates.
"Almost half. Because from the bank we are paying interest at 11 per cent , 12 per cent, private banks it is 14 per cent. Mudra is only 7.5 per cent. It is a big benefit to the customer who pay as much as 21-22 per cent interest. It can now be reduced to below 18 per cent," said Ajay Maity, Chairman, The Village Financial Services and often called the Mohammed Yunus of the east.
This is good news for Arati, who has borrowed and invested heavily in her teashop in the last 10 years. Her current outstanding is 40,000 rupees. She wants more loan and at a lower rate.
"I need more money. I want 50,000, I get 45,000. How will I do anything? And the interest is high... If I don't get more money, how will I see big dreams?" she says.
MUDRA's low rate of interest can get Arati bigger and cheaper loans perhaps. But the claims on MUDRA'S job creation still seem out of sync.
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