PM Svanidhi Empowering Nano Entrepreneurs

Shalini Pandey

Street vendors are nanoentrepreneurs and an integral part of city life. The ease of access and the relatively lesser prices of goods and services, make them popular amongst city dwellers, especially amongst the middle and lower class urban families. Given the demographic dividend in India and the lack of employment in the formal sector, many people turn towards the informal sector for livelihood. For the majority of urban poor, there is a natural inclination towards vending on streets due to the ease of initiating a business. These street vendors are vital to the urban economy because they do not just generate employment for themselves and make life easier for urban citizens, but also contribute towards developing a demand for goods and services for many businesses and enterprises. They are a valuable link for the supply chains.

It is evident that street vendors constitute the most visible self-employed group of workers in the informal sector. It is unfortunate that despite a substantial presence of street vendors across the country, our cities are not yet ready to acknowledge and accept them as a part of the urban fabric and provide them space for their businesses. Despite being a vital component of urban India, they are considered illegal, and disruptive of order in the city. The continuous denial of public space and recognition of their work and contribution to the economy leads to perpetuation of informality. This scenario is undergoing a slow change with the enactment of the landmark Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act of 2014.

Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act, 2014

The legislation outlined the major steps to be taken for the protection of livelihood rights, social security and regulation of urban street vending. The Act conceived a Town Vending Committee (TVC) as a participatory space for all stakeholders, including the street vendors, thus giving them the right for the first time to participate in the decisionmaking body at the city level. The TVC is responsible for conducting surveys in their cities to identify all the street vendors, and subsequently issue Certificates of Vending (CoV), and further, allot space in designated vending zones. The CoV is a document that provides recognition and legal protection to the vendor's business, and helps prevent unnecessary questioning and action by authorities such as the police and civic bodies. Although this Act tried to resolve basic concerns of street vendors, in reality, its implementation remained patchy as many States/ UTs failed to notify the scheme and rules as required by the Act, as a result most street vendors continued facing harassment and struggled on a daily basis for earning their livelihood.

COVID-19 and the Livelihood Crisis 

In spite of all those struggles, challenges and harassment, street vendors continued to operate in our urban spaces. Every day was a struggle with a new set of problems, but what they didn't see coming was an unprecedented pandemic and the consequent national lockdown. The world over, Covid-19 disrupted the economic activities. Everyone was hit hard by the subsequent lockdowns. The informal sector, having thrived on their daily income for survival, was hit the hardest. The street vending business is heavily dependent on the seamless movement of the public. The COVID-19 induced lockdowns severely limited this possibility and impacted the lives and livelihood opportunities of street vendors. The vendors did not have enough time to finish selling their perishable goods or safely store the non perishables. Many of them suffered from non-recoverable losses and they had little savings and no back-up plan. Unable to survive, many street vendors who had migrated to larger urban areas chose to travel back to their home towns and villages.

As the lockdown started to relax, street vendors were in despair as they did not have any capital to buy goods to rebuild their businesses. Typically, street vendors rely on loans from family members, moneylenders and wholesalers, but the rates of interest are so high that it becomes a debt trap. It was difficult for street vendors to avail loans from banks as their occupation was not recognized in the absence of CoV, and they did not have necessary collaterals.

It was in response to this pressing need that the Government of India decided to launch the Prime Minister Street Vendor's AtmaNirbharNidhi (PM SVANidhi) Scheme as part of the AtmaNirbhar Bharat package, in an attempt to help street vendors resume their livelihood and bring them back on their feet.

PM SVANidhi: Mainstreaming Street Vendors

Ministry of Housing and Urban Affairs (MoHUA) launched the Prime Minister Street Vendor's AtmaNirbharNidhi (PM SVANidhi) Scheme on June 01, 2020 with the aim of facilitating collateral free working capital loans to street vendors to restart their businesses, which were adversely impacted during the Covid-19 pandemic. The Scheme has the following features:

1. Facilitate collateral free working capital loan up to Rs 10,000, of 1 year tenure, with enhanced loan of Rs 20,000 and Rs 50,000 in the second and third tranches respectively, on repayment of earlier loans. .

2. Incentivize regular repayment, through interest subsidy @ 7% per annum; and no penalty on early repayment of loan.

3. Reward digital transactions, by way of cash back up to Rs 1,200 per year.

The scheme was extended to all street vendors vending in urban areas, including those coming from the surrounding development/peri-urban/ rural areas and vending within the geographical limits of the Urban Local Bodies (ULBs).

Hassle-free Processes for Financial inclusion

Before the experiment of PMSVANidhi, it was very clear that lending institutions were hesitant to give loans to those in the informal economy as their professions are not formally recognized, and they were considered high credit risks. In addition, the very processes of lending are often hostile towards such applicants.

PM SVANidhi scheme solved the problem of recognition by defining and allowing Letter of Recommendation (LoR). Credit risk was addressed by guaranteeing a part of the borrowed debt in case of nonrepayment. The Scheme is implemented not just through scheduled banks, but also through the entire range of financial institutions including Regional Rural Banks (RRBs), Small Finance Banks (SFBs), Cooperative Banks, NonBanking Finance Companies (NBFCs), Micro Finance Institutions (MFIs), and even Self- Help Group (SHG) Banks.

The solution to easing the difficulties of banking processes for street vendors, and of the Lending Institutions (LI) themselves to handle the huge bulk of applications, was to develop a fully IT-based system. A dedicated portal for PM SVANidhi was built, onto which all LIs and all ULBs were linked, and an online loan application form was created. Street vendors could fill and submit loan applications online, proactively supported by staff of LIs or ULBs. A mobile application was also developed to further ease this process. KYC processes were also online (e-KYC) through integration with the extensive UIDAI database.

Not only application, but the entire process of loan sanctions and disbursements is also online. The immense success of this intervention is visible through the 45 lakh applications that have been received in just 18 months. Of these, about 33 lakh loans have been sanctioned till date. The ease and speed with which these vendors are integrated in the formal credit system and thereby in the formal economy is remarkable.

Providing Sustainable Financial Support to Vendors

Street vendors have traditionally been reliant on their families, friends, money lenders, and other such informal sources for loans. It is undeniable that the street vendors may not be able to meet all their financial needs with one loan and may require multiple rounds of working capital loans to help them expand their business, and for other needs. Keeping in mind this need for repeat loans, the PM SVANidhi scheme has made provisions for the sanction of higher loan amounts to street vendors who have made early or timely repayment of the first loan. A vendor, who has availed Rs. 10,000 and shown a good track record, would be eligible for a sum of Rs. 20,000 as their second loan, and further on repayment of second loan, be eligible for Rs. 50,000 as their third loan. The Scheme is designed to provide a sustainable financial model that caters to the needs of street vendors, not just during the pandemic, but also for their future needs.

Cultivating Good Repayment Practices

One of the biggest apprehensions that lenders face in providing loans to the informal sector is the fear of non- repayment. With loans being denied to the street vendors on this front, they get pushed down further into poverty.

The PM SVANidhi scheme navigates this concern by incentivizing the street vendors with a 7% interest subsidy that will be directly transferred to the beneficiaries account on timely repayment of EMIs. This design of the scheme encourages the vendors to make timely payments, and cultivates good repayment habits in street vendors.

Integration of Street Vendors into the Digital Economy

Facilitating street vendors in making and receiving digital transactions is a key feature of the scheme. At the time of disbursal of SVANidhi loans, every street vendor is provided and trained with QR code. More than 25 lakh street vendors are now empowered to use digital payments. A complete change to such digital platforms may not happen overnight, but the seeds have been sown. It is heartening to know that PM SVANidhi beneficiaries have conducted crores of digital transactions.

As PM SVANidhi is intended to bring vendors into the formal financial system, it is also the perfect interface to introduce them to the tool of digital payments. Empowering vendors to make and receive payments digitally also increases the possibility of digital payments in public spaces, gradually moving away from the reliance on physical currency. This is also in line with the Government's vision of 'Digital India' which intends to build a digitally empowered India. The use of digital payments also creates a trail of transactions, which can help with establishing the street vendor's credit history, opening up further financial possibilities.

Expanding Customer Base for Street Food Vendors

Street vendors constantly adapt to accommodate the changes in demand, and shift their business with the season. Street food culture is an integral part of Indian cities. With the lockdown, there has been a shift in purchasing habits. More people prefer the ease of ordering online and having goods delivered to their doorstep. People avoided eating out, and preferred ordering food into the comfort and safety of their homes. Realizing this, a new initiative launched under PMSVANidhi in partnership with fooddelivery companies like Swiggy and Zomato to offer a platform for street food vendors to expand their customer base immensely. Menus are digitized and FSSAI training and licensing is done for the vendors, and they are trained in using the mobile applications. Presently, thousands of such street food vendors have been onboarded on these e-commerce platforms and successfully growing their businesses.

PM SVANidhi: More than Easy Loan

PM SVANidhi was not designed to be a mere injection of cash to enable street vendors to meet immediate necessities to restart their business. The Scheme regards street vendors as an essential part of the economy and recognizes the need to formalize them, and build a supportive environment to help them flourish. Apart from the loan itself, the Scheme has several parallel initiatives to make this a possibility. PM SVANidhi scheme should not be seen from the perspective of extending only loans to street vendors, but should also be seen as an instrument for outreach to street vendors and their families' for their holistic development and socioeconomic upliftment.

The Government through this scheme has been able to address the needs of this crucial sector. It is a pioneer initiative and a successful attempt by the government towards positively impacting the street vending ecosystem at many levels. Few key impacts are given as under:-

(i)                  The Scheme nudged State/UTs for notification of Scheme and Rules under Street Vendors Act, 2014. The Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act, 2014 lays down the outline for protecting and empowering street vendors, but in reality, its implementation remained hollow without States/UTs notifying Rules and Schemes under the Act. The moment of need created in the wake of COVID-19 made PM SVANidhi an extremely sought-after scheme. Only street vendors in States which have notified the Rules and Scheme under Street Vendors Act, 2014 were eligible for the PM SVANidhi scheme. As a result of this condition, all States and Union Territories have since met this requirement. In addition to being eligible for the PM SVANidhi loan, street vendors throughout the country are now protected under all the provisions of the Street Vendors Act.

(ii)                Ensuring Inclusivity of Street Vendors: For years, street vendors have been contesting for space and recognition from Urban Local Bodies (ULB). The Street Vendors Act of 2014 provides for conducting surveys for the identification of street vendors in the city and issuance of Certificates of Vending to them. However, with many States failing to notify the Scheme, it is disappointing that many ULBs have not even conducted the identification survey of street vendors, so far. ULBs have been reluctant in conducting surveys, possibly because of the unwillingness to take responsibility for this informal sector and to provide them recognition, space, ease of doing business and social security. With the lack of cooperation from ULBs, it became essential to eliminate the top-down approach for recognition of street vendors, and develop a demand-based model. Under the PM SVANidhi scheme, street vendors who were in need of loans could now approach the ULBs. The scheme ensures that no vendor's request is turned down by the ULBs due to lack of recognition, including street vendors who have been left out from previous surveys or those belonging to the surrounding develop-ment/ peri-urban / rural areas and vending within the geographical limits of the ULBs.

(iii)               Letter of Recommendation (LoR) Concept: For the purpose of including all these left out vendors to get the benefits of the scheme, the concept of Letter of Recommendation (LoR) was introduced in the scheme, which is to be issued by the ULB/Town Vending Committee (TVC) after verifying the proof of vending submitted by the vendors. A stand-out feature of this initiative is the range of documents and evidence that can be used by a street vendor to establish their identity, taking it beyond the confines of the survey, prescribed in the Street Vendors Act, 2014. PMSVANidhi expands the option of such documents which includes:

a. Several States had prepared lists for distribution of benefits to the urban poor, including street vendors, during the COVID-19 lockdown. Street vendors on these lists were directly made eligible to access the PM SVANidhi scheme.

b. Vendors could present proof of membership in Street Vendor Associations. In fact, through this provision, affiliation of vendors to such organizations has been formally acknowledged for the first time.

c. Paperwork generated from previous loan applications which mention the vendor's profession could also be used.

d. A vendor could even use challans from penalties paid for vending activities. These challans, a symbol of tyranny signifying the double humiliation of financial loss as well as physical eviction can now be used as instruments for their empowerment.

e. Understandably, a potential beneficiary may not have kept these pieces of paper safe. To tackle this, a demand- based enquiry is offered as a solution, where vendors may request and a ULB may conduct an enquiry to verify their claim.

With all these new options, PM SVANidhi has covered practically all avenues of identifying street vendors, and enabling their access to this scheme. The success of LoR concept can be assessed from the fact that in only 18 months of the implementation of PM SVANidhi, over 31 lakh* applications for LoR have been received and over 29 lakh* LoRs have been approved and these street vendors became eligible to apply for the loan under PM SVANidhi. Given that over 45 lakh loan applications have been received, we can say that without the initiative of LoR, huge chunk of the street vendors would have been denied a chance at rebuilding their lives through the loans offered through the scheme.

Building Safety Net: SVANidhi se Samriddhi

Street vendors, as informal workers, do not have access to formal social security measures. They are a highly vulnerable population as self employed poor. In fact, they often resort to borrowing to meet needs such as childrens' education, health-care, etc. When emergencies such as illness or accidents occur, they reach out to sources such as trade unions or money lenders, and can end up in severe debt. This is despite the existence of many welfare schemes designed by the Government for the urban poor and those in the informal sector, as there are often gaps in actually identifying and reaching these beneficiaries.

PM SVANidhi was conceptualized for the holistic upliftment of street vendors, and the importance of addressing socio- economic needs of the beneficiaries such as access to health care, insurance benefits, maternity benefits etc. was understood. With this in mind, 'SVANidhi se Samriddhi' was envisioned as an additional component of the scheme. SVANidhi se Samriddhi initiative is designed to build a safety net for the beneficiaries' families so that they need not rely on the informal borrowings for their other needs. It aims to link the beneficiaries and their families to existing socio-economic welfare schemes of the Government of India, targeting their holistic development and socio-economic upliftment. Eight schemes offered by five different Ministries have been identified for this. These schemes are PM Jeevan Jyoti Bima Yojana, PM Suraksha Bima Yojana, Jan Dhan Yojana, One Nation One Ration Card, PM Shram Yogi MaandhanYojana, Registration under BoCW, Janani Suraksha Yojana, PMMatru Vandana Yojana.

The street vendors who have received PM SVANidhi loans, and their immediate family members, are surveyed by ULB officials with a specially developed IT tool. Information on housing and assets, migration, education and skills, income, aspirations, etc. are collected. Based on this information, the IT tool automatically identifies welfare scheme eligibility. The eligible vendors and families are invited to city-level camps held every month, where functionaries from the various concerned Ministries assemble and enable application and sanction of these welfare schemes. In effect, a singlewindow system for street vendors and their families to access these scheme benefits. So far, socio economic profiling for over 25 lakh PMSVANidhi beneficiaries and their family members have been completed and over 21.5 lakh benefits of various welfare schemes have been extended to them in 125 cities. This unique initiative is being expanded to all cities shortly.

The achievements of this component are two-fold: a socioeconomic database of street vendors is developed, and a convergence of welfare schemes is brought about; both one-of-its-kind attempts and accomplishments.

PMSVANidhi is a first of its kind scheme targeting the concerns and welfare of street vendors in a holistic way. The scheme is not only addressing the immediate requirement emerging from the pandemic for providing support for resumption of their livelihoods, but also providing a package with various related initiatives for their continuous growth and overall socio-economic development. The scheme has taken a step forward for providing inclusive development for street vendors. It is high time that our cities step up their efforts to recognize the due significance of street vendors in our economy and daily life, and expedite the implementation of the scheme and related initiatives, while simultaneously addressing the existing challenges in providing space to these vendors in cities. Such a proactive approach may open up various opportunities of livelihood for urban poor in our cities and could be a way to handle the complexities of urban poverty.

The author is Director, Ministry of Housing and Urban Affairs, Government of India. She can be reached at pshaleenee.p@gmail.com.

(Views expressed are personal)