Only 11% Of Vulnerable Street Vendors Benefitted From PM Credit Scheme: Survey
Their businesses hit by the pandemic, the government micro-credit scheme could have helped the poorest of India's street vendors. But only 11% of them could get a loan
New Delhi: Naresh Upadhyay, a street vendor from Anand Vihar in east Delhi, had applied for a Letter of Recommendation (LOR) from the East Delhi municipal corporation in December 2020. This letter would have helped him avail of a loan of Rs 10,000 under the PM SVANidhi scheme, a government micro-credit programme to help street vendors formalise their businesses.
Upadhyay is among the millions of street vendors in India whose businesses have been hit by the pandemic. He had to close his kiosk when the lockdown was announced last year, and even after he reopened in January 2021, he has had few customers for the clothes and accessories he sells.
When the LOR arrived, Upadhyay found it riddled with errors. He had specified that he was a 'fixed' (permanent) vendor and had given the address of his stall, which has been running for nearly 20 years. But the LOR put him down as a 'mobile' vendor who ran his business from the 'New Delhi Municipal Corporation area'.
Worried that he would be accused of falsifying information, Upadhyay dropped his loan plan. Many other small vendors were also issued LORs with wrong information, he told IndiaSpend.
As Upadhyay's experience illustrates, the first phase of the two-year PM SVANidhi scheme, launched in June 2020, has been poorly implemented and has had limited impact on the most vulnerable section of street vendors it was meant to empower, according to a recent survey conducted by Indo Global Social Service Society (IGSSS), a civil society organisation working with informal workers and settlements. These are street vendors who fall into the C and D categories of the scheme--those who do no have certificates of vending that would allow them to operate without the threat of intimidation or displacement by the police or municipal authorities.
Up to 75% of the vendors surveyed belonged to the vulnerable C and D categories and only 11% of respondents have received the Rs 10,000 loan. The study included over 1,600 respondents from 15 cities spanning 10 states and was conducted just before the second surge of the pandemic arrived, which caused a livelihood crisis for those working in the informal sector.
The street vendors in the C and D category are daily wagers. Previous studies exploring the socio-economic profile of vendors (some studies focusing exclusively on women vendors) in different cities have established that most street vendors, especially the vulnerable ones, are out-of-work migrant workers from neighbouring rural districts or states. Their daily transactions involve busy markets and hand-to-hand transactions, which were decimated by the lockdowns.
Poor awareness of the scheme among vendors, complicated online procedures, delays in banks and an over-dependance on urban local bodies for documentation--all these factors have obstructed the reach of the credit scheme, especially among vulnerable street vendors, the IGSSS study has concluded.
Street vendors in India, estimated at 10 million, constitute roughly 11% of the urban workers, and play a variety of roles in the life of its cities. The vending economy has a turnover of around Rs 80 crore a day, and every street entrepreneur or trader supports an average of three others as employees, partners or workers.
Only one-fourth covered
Of the estimated 10 millions street vendors in India, the SVANidhi scheme is aimed at half, 5 million. The beneficiaries are known as "hawkers, thelewala, rehriwala, theliphadwala etc. in different areas and contexts", according to the scheme website. They supply goods such as vegetables, fruits, street food, tea, pakodas, bread, eggs, apparel, footwear, artisan products, books/stationery, etc., and provide services that "include barbershops, cobblers, pan shops, laundry".
However, the IGSSS study found that 62% of all the respondents have never been included in the mandated street vendor survey which is conducted jointly by the municipal corporations and Town Vending Committee (TVS), set up as per the Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act, 2014, and comprised of vendors (40%) and corporation officials. The survey is used to award vendors the identity documents necessary for loan applications.
Only 25% of all respondents have some form of identification i.e. Vendor Certificates/Vendor ID Card/Survey Slip. In most cases, vendors had temporary survey slips or membership cards issued by hawker unions such as the National Hawkers Federation and Shaheed Bhagat Singh Hawkers Union, Ekta Hawkers Union. But they did not have the certificates of vending granted by the municipal corporation and the TVC.
Nearly 40% of respondents were not aware of the loan scheme. And 51% of all vendor respondents had not applied for a loan under the scheme. The reasons ranged from an inability to repay loans, lack of awareness about how or where to apply for the loan or its eligibility conditions, and not getting any assistance with the application process.
These findings are from bigger cities, state capitals where there is a sizeable presence of NGOs, civil society organisations and hawker unions to guide, organise and assist street vendors to avail schemes such as these. No information is available about vendors in small cities and towns.
Banks remain hesitant
Nearly 85% of those who had applied for the SVANidhi loan scheme did not have an LOR from their local municipal corporation, which is crucial for loan application, the survey found.
The data on the scheme website state that more than 2.4 million loans (almost 50% of the 5 million target) have been disbursed, but banks seem hesitant to provide loans to vulnerable vendors, according to testimonies collected by the individual surveyors, as most vendors are migrant workers without documentation.
For instance, some street vendors with LORs were told by banks to furnish documents that are not required under the SVANidhi eligibility guidelines--for example, identity cards of husbands (in the case of women), address proof for relatives, village addresses and so on, surveyors found. These demands meant that many applicants were turned away by banks.
In Udaipur, a group of 60 vendors were evicted right before the municipal corporation started issuing LORs, said the IGSSS survey. Their names were struck off the TVC survey list before they could approach the corporation or the banks. "We don't need the loan when we don't even have a place to sell our wares," said Shiv, a drinks vendor who was evicted.
Need for system changes
Vendors are punctual about sticking to their repayment schedules and responsive to reminders if they are late with payments, said Vinayak Jain, a senior official at Atyati Tech, a company that connects street vendors to banks and financial institutions to facilitate SVANidhi loans. "This is something that is not usually seen among the recipients of government-backed loan schemes."
The vendors are prompt with repayment perhaps because they are being offered, for the very first time, lower rates of interest and an inroad into the formal banking system, said Jain. Most vendors tend to borrow from private entities at exorbitant interest rates.
The second tranche of the loan scheme will become available to vendors from August 2021 (after one year of the first tranche being issued), as per the scheme, giving them access to more funds if they repay the first lot in time. However, the pandemic's second wave in 2021 has depleted the resources of informal sector workers even further, leaving many vendors ineligible for the second tranche. This is why hawker union leaders have been calling for the scheme to be permanent and not end as a short-term crisis measure.
The loan scheme can be permanent if a robust debt collection mechanism can be put in place, said the financial officers at Atyati Tech. For this, NGOs and hawker unions must find linkages with banks, they pointed out. "No one likes going all the way to a bank to pay their dues, especially if you're a street vendor who has had very little experience with banking. Members of the hawker groups or NGOs should work as collection agents for the banks and collect small weekly or fortnightly sums which the vendors can afford to pay," said Jain. The same idea was proposed by the National Hawker Federation in 2020 when the scheme had been launched, but was not implemented.
In the second wave, a few state governments such as Karnataka, Uttar Pradesh, Odisha, Maharashtra and Madhya Pradesh announced cash relief for street vendors--a one-time cash transfer of Rs 1,000-2,000 to help them tide over the ongoing crisis. However, these relief measures are restricted to vendors who are registered beneficiaries of the SVANidhi scheme or those who have been surveyed by the ULBs.
According to the survey, there have been reports of undue restrictions and heavy fines imposed by state and local administrations on street vendors. After the first lockdown, most food, garment and plastic goods hawkers could not restart their businesses at all. For those who returned to pre-lockdown levels of business in January of 2021, the second wave spelt disaster. With the threat of an impending third wave, the future looks bleak too, the report said.
Up to 65% of respondents reported facing harassment or eviction after the SVANidhi scheme was announced and two months after the Ministry of Housing and Urban Affairs declared street vendors 'essential service providers', as per the survey.
Here are suggestions from Shaktiman Ghosh, all-India general secretary of the National Hawker Federation, and a veteran on street vendor issues:
PM SVANidhi scheme should be permanent: It was introduced as a short-term measure to address a crisis but should be reimagined as a permanent development scheme for 'ultra-micro industries' (street vendors). This would allow them to access credit on a permanent basis.
Provision of LORs to all vendors: C and D categories of vendors are left out of the scheme and these are those who are less likely to be surveyed, do not possess a vending certificate from urban local bodies and need an LOR. They are totally dependent on municipal corporations who were expected to conduct these surveys and register vendors. The survey indicates that local governments have hindered the progress of the scheme in its inaugural year.
Inclusion of all India vendor representatives in monitoring committees: Section 19 of the SVANidhi scheme guidelines (establishing central, state and local monitoring committees to assess its progress) should be modified to include representatives from the vendor unions. They were involved in the conception of the scheme, so should be included in its implementation too.
Local administrations should operate according to Street Vendors Act: Primacy should be awarded to the Street Vendors Act 2014 which was enacted to regulate street vendors in public areas and protect their rights. The Act defines a street vendor as "a person engaged in vending of articles of everyday use or offering services to the general public, in any public place or private area, from a temporary built up structure or by moving from place to place". The act envisages the formation of TVCs in various districts to ensure that all street vendors identified by the government are accommodated in the vending zones subject to norms. To avoid widespread evictions and harassment of vendors, the scheme, along with related procedures such as declaring of vending zones, drafting of state rules, schemes and bye-laws, must be dealt with in the context of this Act.
On September 18, the Ministry of Housing and Urban Affairs issued a statement in a series of tweets. We are carrying the text from the tweets here, with our responses in line:
Tweet 1: We have seen a misleading & malicious article almost bordering on manufacturing an alternate narrative on a hugely successful #PMSVANidhi Scheme launched to provide working capital loans to urban street vendors to help them restart their businesses badly affected by the pandemic.
Response: All the facts mentioned by the ministry in subsequent tweets were part of the story.
Tweet 2: Interestingly, the article is based on an apparently unscientific 'survey' which has a severely restricted sample size in only 15 ULBs, & was conducted before the severe second wave of Covid hit us & for reasons best known, has only included vendors not identified by the ULBs.
Response: The survey was conducted by Indo Global Social Service Society. Paragraph 6 of the story details these facts about the survey clearly.
Tweet 3: Here are the facts. Within a little over just 14 months (including 4 months of 2nd wave), 27.5 lakh loans have been sanctioned; of which 25 lakh loans have already been disbursed. These numbers are increasing every day. Certainly not what the media article wants to believe!
Response: Paragraph 2 under the section "Banks remain hesitant" clearly mentions the number of disbursed loans: "The data on the scheme website state that more than 2.4 million loans (almost 50% of the 5 million target) have been disbursed".
Tweet 4: The success of the scheme & the positive change it is bringing in the lives of the beneficiaries can be gauged from the fact that about 1 lakh loans have already been repaid, which demonstrates their unflinching faith in the scheme.
Response: The article details the logistical and other issues faced by street vendors in accessing this scheme.
Tweet 5: The Scheme has also provided impetus in identification of street vendors which is evident from the fact that within one year the total number of vendors recognised has increased from 15.2 lakhs to about 49 lakhs. The article clearly reflects YELLOW journalism.
Response: Estimates suggest that India has 10 million (1 crore) street vendors. Half of them--5 million (50 lakh)--are targeted under the scheme, while about 2.5 million (25 lakh) loans have been disbursed.
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