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Daily News Analysis

Explained: How scheme for street vendors will help alleviate poverty

4th November, 2020 GOVERNANCE

Context: In a new scheme called the Pradhan Mantri Street Vendors Atmanirbhar Nidhi (PM SVANidhi), the central government is extending Rs 10,000 loan as working capital to street vendors to restart their businesses, which have been hit by the Covid-19 pandemic.

  • The scheme is already a hit; so far 25 lakh street vendors have come forward seeking the loan.
  • The next stage being contemplated is to make a first-of-its-kind database of the beneficiaries of this scheme to see who they are, and where they belong vis-à-vis the government’s social security net woven through various welfare schemes on education, housing, food, livelihood et al.

Why is such a study needed?

  • The scheme plans to extend the microcredit to over 50 lakh street vendors across India, which is the estimated number of the hawkers as per various urban local bodies.
  • Government wants to use the data for comprehensive poverty alleviation

NSSO data on Street Vendors:

  • There is hardly any comprehensive structured data on the socio-economic profile of street vendors and the street vending economy in India, even in government surveys like the National Sample Survey Organisation (NSSO) and the Economic Survey.
  • The NSSO, has defined street vendors through a category of “enterprises without fixed premises” among “Unincorporated Non-Agricultural Enterprises (excluding construction)”, in its 67-68th round report published in 2011-12.
  • “Vending is an important source of employment for a large number of urban poor as it requires low skills and small financial inputs and for the customers, it provides convenience and low priced goods and services.
  • The NSSO data estimated that around 200,000 women and 21,500 children were engaged in street vending.
  • Around 1.18 million households were dependent on this sector as their primary source of income, according to a paper by think-tank Observer Research Foundation.

PM SVANidhi scheme

  • It brings in financial mainstreaming of street vendors through loans and digital payments, the government wants to formalise its understanding of this sector, and, based on that understanding, bring them under various schemes.
  • One of the benefits the scheme is helping in mainstreaming and legitimising genuine street vendors who have not got valid identity cards simply because local bodies have not updated their lists for years.

How will the study be done?

  • Banks, as part of its common processes, are collecting data about street vendors who are beneficiaries of the project.
  • Such data already captured by banks and municipal bodies will be leveraged to create a profiling of the vendors.

Will this actually work towards poverty alleviation?

  • Becoming formal beneficiaries of various government schemes works as a big step towards entering the policy intervention network.
  • It will helps in financial mainstreaming in the long run.
  • PMSVANidhi is incentivising digital transactions by street vendors.
  • They will soon be given QR codes to receive payments through the government’s BHIM UPI app.
  • They are given cash-back for digital transactions too.
  • The idea is that with a trail of digital transactions against their names, they will create a formal transaction history in banks and will slowly build their creditworthiness for the future.