PM Vidyalaxmi: A Mission Mode Scheme to Provide Financial Support to Meritorious Students
Dr. Rajesh Kumar
Vinayak Kumar Jha
The National Education Policy (NEP) 2020 outlines a comprehensive roadmap for transforming the Indian education system in the 21st century, underpinned by five foundational pillars: Access, Equity, Quality, Affordability, and Accountability. The recently launched Pradhan Mantri (PM) Vidyalaxmi Scheme aligns with the principles of NEP 2020. Prime Minister Shri Narendra Modi has emphasised that initiatives like Vidyalaxmi are part of India's commitment to becoming a welfare society. Through NEP 2020 and schemes such as Vidyalaxmi, the government aims to remove structural barriers, ensuring that youth can focus solely on their studies and future, without other concerns.
PM Vidyalaxmi is a Mission Mode Scheme primarily designed to promote accessible and equitable higher education for meritorious students across the country by offering financial assistance. It seeks to eliminate barriers to accessing quality education at reputed Higher Education Institutions (HEIs) through collateral-free and guarantor-free loans. The scheme targets deserving students from all sections of society, with particular emphasis on weaker and marginalised groups, in line with the guiding principles of the National Education Policy 2020.
The key stakeholders of the PM Vidyalaxmi Scheme are students with both merit and financial need. Interest subventions and loan guarantees help alleviate some of the financial pressure on students and their families. The scheme aims to bridge the gap between ambition and opportunity, ensuring that meritorious students are not denied access to higher education due to financial constraints.
The benefits of the scheme will be accessible to students through the PM Vidyalaxmi portal, a one-stop platform designed to streamline the loan application and disbursement process. Students who secure admission to the top 860 Higher Educational Institutions (HEIs) in India, as per the National Institutional Ranking Framework (NIRF), can apply for loans under the scheme. With both collateral-free and guarantor-free loan processes, the scheme simplifies the often complex and restrictive process of financing education.
PM Vidyalaxmi Budget Allocation: The initial allocation of funds for the PM Vidyalaxmi scheme is Rs. 3,600 crore for the financial years 2023-24 to 2030-31. It is expected to support 22 lakh meritorious students every year, with the goal that financial constraints should never hinder academic excellence. The PM Vidyalaxmi Scheme has the potential to accelerate the pace of the Gross Enrolment Ratio (GER), alongside other schemes such as PM Uchchatar Shiksha Protsahan (PM-USP), Central Sector Interest Subsidy (CSIS), and the Credit Guarantee Fund Scheme for Education Loans (CGFSEL), among others.
It is important to note that the Government of India has implemented several reformative measures to increase the GER in higher education, which currently stands at around 28.4%, as per the All India Survey of Higher Education (AISHE) 2022-23, Ministry of Education, Government of India. In comparison, the GER in developed nations is: USA (80%), Canada (90%), the UK (80%), Germany (70%), and Australia (85%). To match the pace of global higher education, the Government of India has set a target of achieving a 50% GER by 2035.
PM Vidyalaxmi Benefits: The scheme offers a distinctive feature of accessible financial aid, significantly reducing the financial burden typically associated with bank loans. It provides education loans without the need for collateral or a guarantor. Furthermore, the scheme attracts banks by offering a 75% credit guarantee on loans up to Rs. 7.5 lakh, which encourages these institutions to lend to deserving students.
Under this scheme, there is also an interest subvention of 3% on loans up to Rs. 10 lakh for families with annual incomes of up to Rs. 8 lakh. A complete interest subvention is available for students from families with incomes below Rs. 4.5 lakh, provided the student is studying at approved Higher Education Institutions at diploma, graduate, or postgraduate levels in technical or professional programmes. This financial aid will be disbursed through e-vouchers and Central Bank Digital Currency (CBDC) wallets, ensuring transparency and traceability in the disbursement process.
PM Vidyalaxmi Beneficiaries: Focused on rewarding academically deserving students from disadvantaged economic backgrounds, the scheme will cover students who secure admission to quality institutions, as per the National Institutional Ranking Framework (NIRF) ranking. The PM Vidyalaxmi Scheme will benefit over 22 lakh meritorious students across the country every year. Education Minister Shri Dharmendra Pradhan emphasised that "No student in India should have to give up on their dreams due to financial limitations." This aligns with the vision of NEP 2020, which advocates for accessible, equitable, and quality education for all.
PM Vidyalaxmi Support Mechanism: PM Vidyalaxmi is not merely a scheme to provide loans; it aims to create an ecosystem in which students from any family can dream big and realise them. The scheme alleviates the financial pressure of repaying high-interest loans, allowing students to focus on their studies. This assistance is particularly vital in high-cost education fields, such as professional and technical courses, where education plays a crucial role in the national workforce.
The scheme builds upon existing financial aid programmes like the PM-USP and its components, such as the Central Sector Interest Subsidy (CSIS) and the Credit Guarantee Fund Scheme for Education Loans (CGFSEL), which specifically target students from lower-income families pursuing technical or professional courses. Together, these initiatives create a cohesive support framework for aspiring students, helping them secure education without financial strain.
Application Process and Accessibility: To apply for financial support under the PM Vidyalaxmi Scheme, students must visit the dedicated PM Vidyalaxmi portal, where they can submit their loan applications. The portal is designed for user-friendliness, ensuring students can apply without excessive documentation or complicated procedures. With an entirely digital process, the portal enables students to monitor their applications, check eligibility for interest subventions, and track loan disbursement, making the experience seamless and transparent.
This centralised platform serves as the access point for all aspects of the scheme, from loan applications to checking eligibility for interest subven-tions. By consolidating services under one portal, the government has ensured that students across India can easily navigate the system and access the financial support they need. Students eligible for interest subventions can apply directly on the portal, where payments will be processed through e-vouchers and CBDC wallets. The integration of digital currency not only streamlines the payment process but also aligns with India's shift towards a digital economy.
Conclusion: The PM Vidyalaxmi Scheme represents a significant step forward in making education more accessible and equitable. By eliminating the financial barriers that families from low socio-economic backgrounds often face in achieving their educational aspirations, this scheme underscores the govern-ment's commitment to fostering a society where education is not constrained by economic limitations. With the visionary spirit of NEP 2020, combined with the potential of modern digital tools, PM Vidyalaxmi is poised to empower the youth of India, enabling them to become the catalysts for a bright, learned, and intelligent future for New India. The scheme will transform millions of lives, allowing students to pursue their academic dreams without the burden of financial constraints.
(The author is Assistant Professor, Central University of Jharkhand, and co-author is a Ph.D. Scholar, Central University of Jharkhand. Feedback on this article can be sent to feedback. employmentnews@gmail.com).
Views expressed are personal.