The government on Saturday announced that it would set up MUDRA, a bank to finance the setting up of small and micro-units and thereby encourage entrepreneurship among SC/STs and OBCs.
While presenting Union Budget 2015-16, Finance Minister Arun Jaitley
on Saturday announced that the government would set up the Micro Units Development Refinance Agency (MUDRA) Bank with a corpus of
Rs 20,000 crore and a credit guarantee corpus of Rs 3,000 crore. The Mudra Bank will refinance institutions through the newly-announced Pradhan Mantri Mudra Yojana.
The proposed bank is part of the government’s Skill India programme and is in line with its focus on job-creation, a big priority as 54 per cent of the Indian population is less than 25 years of age and about 12 million workers join the workforce annually. Jaitley, who launched a slew of initiatives for job creation and skill development, used the word “skill” 12 times in his Budget
“While large corporate and business entities have a role to play, this has to be complemented by informal sector enterprises which generate maximum employment,” he said while presenting the Budget, stressing that members of SC, ST and OBC community will be given priority in lending.
The move would help provide easy capital and funding to such businesses. There are over 5.77 crore small business units, mostly individual proprietorship, which run small manufacturing, trading or service businesses of which 62 per cent are owned by SC/ST.
“These measures will greatly increase the confidence of our young educated and skilled workers who are able to become first-generation enterprises, and existing small businesses will be able to expand their activities. Just as we are banking the unbanked, we are also funding the unfunded,” Jaitley said.
Welcoming the move, T M Bhasin, chairman, Indian Banks Association, said the Mudra Bank will strengthen SMEs.
To boost entrepreneurship, Jaitley also announced a Rs 1,000 crore corpus for a new Self-Employment and Talent Utilisation (SETU) fund that would support all aspects of start-up businesses and other self-employment activities, particularly in technology-driven areas.
Jaitley also announced a National Skills Mission that would consolidate skill initiatives spread across several ministries and allow for standard procedures and outcomes across 31 Sector Skill Councils. The Ministry of Skill Development and Entrepreneurship is already working on a blueprint for the mission, which is likely to be launched over the next few months. Less than five per cent of the Indian workforce has formal skill training.
The minister also promised a more liberal system of raising global capital, incubation facilities in centres of excellence, funding for seed capital and ease of doing business — measures the government hopes will create 1 lakh jobs in the technology sector.
“The stress on skilling by various schemes and reforms focused on the youth coupled with the decision to give employees an option to opt for their PF or EPFO contribution will definitely give a fillip to job creation. Apart from infrastructure, the allocation of
Rs 1,000 crore towards the start-up eco-system will further drive the employment opportunities in the sector,” said Ashok Reddy, MD and co-founder, TeamLease Services.