Government schemes to support women entrepreneurs in India fail to account for ground realities, leaving women-led micro-enterprises struggling for growth and survival.
Apoorva Ajith | January 10, 2025
Komal Gupta (35), an entrepreneur from Delhi, sat across from a banker, hoping for loan approval to expand her home-based stitching business. The banker glanced around, puzzled. “Where is your setup?” he asked, referring to a designated workspace.
Gupta smirked and said, “If I had money for a setup, why would I apply for a government loan? Mujhe interest bharne ka koi shauk thodina hai (I’m not thrilled about paying interest).” The bank rejected her loan request as she did not have a workspace.
Gupta’s words capture the frustration of countless women who are restricted by criteria, making the central government’s schemes to support women-led micro-entrepreneurship a failed promise.
Women-led businesses make up 20% of the 63.4 million micro, small, and medium enterprises (MSME) in India, according to the 2023-24 annual report of the Ministry of MSME. Only 2.67% of them have scaled up to a medium enterprise, which has a turnover of more than Rs 50 lakh, according to the annual report. The numbers are drastically different for male-led enterprises. There are 50.4 million male-run businesses in the country, of which, 97.33% have grown into a medium enterprise.
Vinita Chauhan (36), who runs a parlor on the GT Karnal Road, New Delhi, wanted to start an academy to teach beauty services. “I cannot expand my business now. My loan got rejected as I did not have an Income tax return (ITR) and MSME certificate provided by the Ministry of MSME.”
Most central government schemes that provide financial assistance to women entrepreneurs such as Stand-up India, National Urban Livelihood Mission (NULM), and PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) scheme require documents like Aadhar Card, Pan Card, Project Report, ITR, and bank statements, among others. Women who run micro-enterprises often do not have these documents.
The central government’s flagship schemes like Mudra Yojana, Mahila Samriddhi Yojana, Mahila Coir Yojana, and Prime Minister Employment Generation Programme have had about a 40% plunge in women beneficiaries post-COVID.
“There is no system that binds them to make these documents. Either they can make them with help or not make them at all,” said Dr B. Rajeshwari, thematic lead of research, policy, and communication at Azad Foundation, a non-governmental organisation (NGO) for women development.
Women can avail of one government scheme for financial aid at a time. They cannot apply for more assistance until they repay the first loan. This lengthens the process of scaling up a business.
Shabana (40), who goes by her first name, runs a boutique in the Bawana village of Delhi. With little awareness of schemes and credit, she took a Rs 10,000 loan under the PM SVANidhi scheme. “I bought some material but it did not make much of a difference,” she said. “I had no idea I could borrow more or borrow under some other scheme.”
Shabana gained knowledge of the several schemes she could avail of from the Axis Development Foundation, an NGO working across six cities in the country to help women gain access to government schemes. She then wanted to take a Rs.10 lakh loan to open another boutique and start hand embroidery along with stitching. The central government rejected the loan after she was asked to pay back the PM SVANidhi loan.
”I lost out on the wedding season because I did not get the loan. I could have earned a lot of money and expanded in that time,” said Shabana, who has not been able to grow her business for the past year.
Nearly 70% of women-led MSMEs’ finance needs are unserved or underserved with the formal sources of credit supplying only Rs 600 billion of the Rs 1.95 trillion credit requirement, said a June 2023 report by MicroSave Consulting, a global consulting firm that promotes financial, social, and economic inclusion through digital technologies.
“The central government should do an impact assessment,” said Dr Rajni Aggarwal, president of the Federation of Indian Women Entrepreneurs, suggesting measures to make government schemes more friendly for women. “The government has so many good schemes, thousands of NGOs but what is the impact, no one knows.”
Several women face pushback from banks even after the central government has approved their loan application. For instance, Komal Gupta learned that her loan request was rejected because the bank said she was not serious about her business due to the absence of a workspace.
“To meet the government’s targets, banks were giving out loans easily. But that increased non-performing assets (NPAs) in the last five years,” said a banker from the Bank of Baroda on the condition of anonymity. “Now, we have to be more strict.” Data on NPAs for loans given through government schemes is not available.
Banks now assess the skills and knowledge of women entrepreneurs. “Banks judge the ability of the person to do business. If someone is not capable they will not give the loan,” said Sukh Sagar Jain, former assistant general manager of the State Bank of India.
Gupta still uses the 15-year-old hand-driven stitching machine that she won from a public college for fashion in Jhandewalan, Delhi after scoring good grades. She could not upgrade the machine or open a shop as she did not get a loan.
“I did not try to get another loan. I have lost faith in the system that claims to help women like me. I have taken matters into my own hands and am trying to borrow money from self-help groups now,” said Gupta.
Calls and emails to the Ministry of MSME did not elicit a response.