India is not shying away from digitization. Data shows that an increasing number of Indians are leveraging the power of digital technology every year. In 2021, India saw 69.2 crore internet users as per an IAMAI KANTAR report titled ‘Internet In India’. By 2025, the report adds, India will have 90 crore internet users. Several government schemes have been launched across the country to extend the benefits of digital literacy.
In 2021, India saw a 51% jump in digital transactions from 2019 and recorded 34.6 crore users who preferred e-payments to conventional transaction methods. Big and small businesses have tapped into the benefits of digitization across India.
One such government scheme that focuses on providing street vendors more autonomy over their business is the PM Street Vendor’s AtmaNirbhar Nidhi scheme, known as the PM SVANidhi scheme.
What is the PM SVANidhi scheme?
PM SVANidhi scheme is a unique project launched by the Ministry of Housing & Urban Affairs in June 2020, to help those affected by the COVID-19 lockdown. The central government aims to support vendors and small businesses with various services through the scheme.
The scheme’s focus, as per the Ministry of Housing & Urban Affairs, is the economic upliftment of street vendors, in addition to their holistic development.
The scheme provides sellers with collateral-free working capital loans of up to Rs 10,000 for one year. Street vendors can use the scheme to resume or establish their business in the aftermath of the pandemic.
Digitization and PM SVANidhi scheme
The PM SVANidhi scheme grants vendors unique rewards when initiating digital transactions. To encourage more digital transactions, the government will leverage digital payment aggregators and stakeholders such as the National Payments Corporation of India and Paytm to help vendors familiarise themselves with the digital platforms on which they will conduct their transactions.
The scheme has also helped create and track credit scores for vendors. The credit score helps generate a record of a vendor’s social-economic particulars. This score will work as the foundation for the future credit requirements for their business.
How PM SVANidhi incentivizes digital transactions
The PM SVANidhi scheme encourages vendors to engage in digital transactions by providing them with a cashback facility. The scheme operates on the principle that such a network of transactions will help create a detailed financial profile of the vendor, with help from payment aggregators such as Paytm.
PM SVANidhi scheme cashback policy
So how do these incentives work? Vendors will receive monthly cashback between Rs 50 and Rs 100 based on their transactions.
Vendors start by receiving Rs 50 upon carrying out 50 eligible monthly transactions. For the subsequent 50 (additional) eligible transactions within the month, vendors will be awarded Rs 25. So per 100 eligible monthly transactions, street vendors will get a cashback of Rs 75.
For the following 100 additional transactions, vendors will receive a cashback of Rs 25, taking the cashback amount to Rs 100 for 200 eligible transactions per month.
Vendors who have been running a business since or before March 24, 2020, can avail of the loan under this scheme. They must also possess a certificate of vending to substantiate their claims. As of October, 2022, loans have been disbursed to over 31 lakh eligible vendors.
The central government scheme was initially scheduled to last till March 2022. However, it has now been extended till December 2024.
By creating a digital footprint, the PM SVANidhi scheme helps formalise a sector that has functioned informally until now.