Evaluating the impact of mudra shishu loans on income and employment growth in ahmedabad

Abstract

This Capstone Project assesses the impacts of Shishu mudra loan (up to ₹50,000) under Pradhan Mantri Mudra Yojna (PMMY) on income generation and employment creation among micro entrepreneurs in the city of Ahmedabad, India. The study examines whether the loans have been transformed into successful business expansion and increased the ability for job creation among the beneficiaries operating in informal sector. After conducting interviews of 110 beneficiaries and bank officials the project highlights that significant portion of loan was used for working capital requirement limiting long term business growth and employment creation. Although income growth was observed among majority of the beneficiaries with most of the business remain family-run small informal business with few instances of hiring and business expansion. The findings tell a strong need of policy refinement, including better financial literacy among borrowers, targeting sectoral specific loans, proper digitalised system for loan process and accountable post-disbursement support system. This research may provide valuable insights for financial institution, policymakers and researchers seeking to improve the effectiveness of microfinance initiatives at grassroot level empowering entrepreneurs and fostering economic development.