Street Vendor Loan Scheme

In her press briefing yesterday, Smt Sitharaman announced Street Vendor Loan Scheme, as follows :

Ø  The scheme will be announced / launched within one month

Ø  It will cover 50 lakh street vendors from all over the country – rural + urban ( approx. fig given by States )

Ø  Each vendor will be eligible for a “ working capital “ loan of up to Rs 10,000

Ø  Total allocation = Rs 5,000 crore

Ø  Digital payments will be incentivized through monetary rewards and enhanced working capital credit would be made available for good repayment behavior.

[ source :

https://www.timesnownews.com/india/article/where-and-how-to-apply-for-the-rs-10000-special-credit-for-street-vendors-announced-by-government/592099  ]

RELATED NEWS :

Ø  Shri Vijay Rupani [ CM-Gujarat ] announced yesterday a similar scheme as follows , with formalities likely to be completed in the coming three months :

#    Loan amount = Max Rs 1 Lakh that carries a tenure of three years [ total of Rs 5,000 crore ]

#    Small traders, street-vendors and small professionals in the state.{ approx. 10 lakh entities }

#   This loan would be available at 2 per cent annual interest while the remaining 6 per cent

    interest would be borne by the state government

#   The beneficiaries would also get a moratorium of six months and would not be required to pay

    either interest of principal amount during this time

#   Loan will be available via written application at co-operative banks, district banks and credit

    co-operative societies. 

[ source : https://www.business-standard.com/article/economy-policy/gujarat-extends-interest-subsidy-loan-for-small-traders-street-vendors-120051401194_1.html  ]

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Of all the “ Relief Steps “ announced by Smt Sitharamanji , over the past 2 days, I believe this, by far , will have the greatest far-reaching / universal impact

I am assuming :

Ø  Terms will be same as in case of SHISHU scheme of MUDRA , viz :

Shishu – Loans up to a limit of INR 50,000 with interest being 1 per cent/month or 12 per cent/annum. The repayment period for such loan is up to 5 years 

For the sake of easier understanding, let us assume :

Ø  Loan amount = Rs 10,000

Ø  Interest Rate = 12 % per year ( 1 % per month )

Ø  Loan period  =  1  year [ no moratorium ]

Therefore , amount re-payable every month :

Ø  Loan Principal amount ……….. Rs   833

Ø  Interest amount ………………    Rs   100

Ø  Total per month…………………  Rs   933  [  total per day = Rs  31 ]

Now consider the following :

Ø  There are nearly 3 lakh hawkers in Mumbai, and according to conservative estimates, each pays anywhere between Rs 20 and Rs 100 in hafta every day.

Ø    This means up to Rs 1.5 crore in cash changes hands every day to protect the businesses that have taken over Mumbai's streets.  /  Nov 22, 2017

              [ https://timesofindia.indiatimes.com/city/mumbai/rs-1-5cr-hafta-changes-hands-daily-to-allow-street-   

                hawking/articleshow/61745661.cms ]

This means, on an average, each “ Unlicensed Street Vendor “ ends up paying a “ Daily Hafta “ to the police, of say, Rs 50  { 3 lakh vendors paying Rs 150 lakh }

But ( I suppose ) , as soon as he gets that Vendor Loan of Rs 10,000 , in essence , the government accepts him as a legitimate vendor and he gets a RIGHT ( official permission ) to sell on the streets

In other words, he becomes a LICENSED vendor , who need not pay daily hafta to police !

That means :

Ø  By re-paying Rs 31 per day { Principal + Interest } , he avoids hafta of Rs 50 per day { Daily saving of Rs 19 }

Ø  Annual saving of Rs 6,945 for each vendor ( round off to Rs 7,000 )

Ø  Saving of Rs 3,500 Crore per year for 50 lakh vendors !

{  I don’t think FM will talk about this SAVING in  to-day’s press briefing  !  Politically incorrect ?  }

     Implications :

Ø  Once the Scheme gets launched and loan-recipient vendors realize that they need not pay DAILY HAFTA to police, there is a good possibility that 500 lakh persons come forward to become STREET VENDORS

  

    What should be the contours of the Scheme ?

     In my following earlier blogs, I have outlined its working :

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BMC proposes : Hawkers will dispose ?                                                    [  26  Feb  2020  ]

Extract :

            #  Grant a hawking license to all 3 lakh hawkers ( and all want to become “self-

   

               employed “), on following terms / conditions / methods :

           #  Entire Mumbai City will be a “ Hawking Zone “ ( why not equal sharing of

              inconvenience by all Mumbai residents ) excluding vicinity of hospital / schools

              Pitch-slots to be allotted on ALL the footpaths of all the roads of Mumbai

               

          #  Hawkers will declare themselves “Self- Employed”, by registering so on BMC web

              site

          #  BMC will issue to them , a hawking license – a plastic card

 

             with, photo, name, gender, birth-date, address, mobile no, Aadhar No, PAN etc .

            Card will be embedded with a pre-paid / rechargeable FasTag , which will

           automatically transfer to BMC’s bank account, LICENSE FEE, as mandated

        #   On hawker’s Smartphone ( with BlueTooth / NFC / Biometric ), BMC will

            install a Mobile App [ HawkWalk ? ], which can read the FasTag in the plastic card

            and display ( 24x7 ), exact location of that hawker on a DASHBOARD in the

           Central Hawking Control Room of BMC (  much better than rigid Sensor anklets on

           feet ! )

      #   If a hawker uses mobile payment app BHIM for accepting payments against his

           sale , 5 % of each SALE PROCEED will get automatically credited to his

          monthly License Fee.

         This great incentive will accelerate DIGITAL PAYMENTS and help organize this

         totally “un-organized “business sector

      #   BMC is planning to use a GIS ( Geographic Information System ) based on

           compiling “ PITCH DIMENSIONS “, using “ Latitude “ and “Longitude “ for each

           SLOT to be allotted , on a given footpath . This is, not only a very cumbersome

           process but also difficult to understand

           I strongly recommend that BMC consider a GIS-based service in HAWKWALK

           mobile app, by integrating it with an appropriate API from ,   www.What3Words.com

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Unlocking Lockdown : Calibrated – Gradual                                                [  04  April  2020  ]

 

Extract :

     Governments should liberalize / encourage “ self employed “ hawkers / vendors to go from door-to-door, with whatever goods they may be selling( eg: Veg. Vendors )

  

     They may be encouraged to form a SOCIETY, and launch a portal where people can register their needs

 

     Currently, in Mumbai alone, there are estimated 3 lakh hawkers ( of which, only

     12,000 are licensed )

 

      Most of them spread their ware on footpaths.

 

      Govt should come out with a scheme ,

 

      whereby they vacate the spaces on footpaths and load their stuff onto hand-carts (

      6’x3’ wooden platforms mounted on 4 bicycle wheels, called RENKDI or LAARY )

      which are a familiar sight all over India.

 

      Corporate ( FMCG and others ) will be happy to donate such carts to the

      government ( costing approx. Rs 1,000 each ), if they are allowed to host their

      product-advts on such carts, permanently.

 

     This ( advt ) could be a 12” wide steel sheet along the 18 feet periphery of the cart

 

     Government may gift / donate such carts to footpath-occupying vendors, and track

     their movements through their Mobile Phones . 3 lakh carts will cost Rs 30 crore but

     these will roam 1500 km of Mumbai roads / streets, delivering good at door-steps.

     Mountain goes to Mohamed !

======================================================

     Social Distancing : Safest – Surest Method ………………………………………[  21  April  2020  ]

 

    Extract :

 

     What we need to do – and do it fast , before 3rd May when , possibly lockdown gets lifted – is :

           #  Massively scale-up this miniscule tribe of Renkdi-wallas ( from a few hundred to a few lakh )

         #  Make them carry all types of essentials / rations / foods / milk ( not merely vegetables / fruits )

         #  Organize them ( by official online licensing ) and allot them specific streets / societies

        #  Direct 60,000 + housing societies of Mumbai, to provide parking space to a government-designated Renkadiwlla

            ( for specified hours )

       #  Allow online E Com retailers ( like Amazon – Flipkart – Swiggy – Zomato- Big Basket - Grofer etc ) to tie-up with

           such “ Government Licensed  Home Delivery Vendors “.

       Their Name / License Number / Mobile Number / Street – Housing Societies allotted

       etc., must be published on the web sites of these E Com retailers

       

       Mobile App of an E Com Retailer , while accepting an Online Order, will mention the

       full details of WHICH VENDOR will make this HOME DELIVERY , indicating

       approximate time of delivery

       

      All payment will be through mobile wallet embedded into the E Com retailer’s Mobile

      App . There will be no cash payment upon delivery

      

         #  While granting online VENDOR LICENSE, government shall sympathetically consider :

#   Migrant Workers stuck in a city ( estimated 35 lakh in Mumbai alone )

#   MSME factory workers who have lost their jobs

#   Domestic servants who are sitting idle at home ( irrespective of govt pleading, no

     home- owner is likely to pay them wages for April )

#   Construction workers who have lost their jobs

#   In Mumbai , existing 3 lakh hawkers who ply their trade from slots on footpath

 

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Dear Madam Sitharamanji,

 

No doubt, officers of Finance Ministry would want to make some changes to the STREET  VENDOR  SELF-EMPLOYMENT SCHEME , as proposed by me above

 

Since Street Vendor Licenses are granted by local municipalities / gram panchayats , it is essential that they too, get a chance to “ Comment “ on my proposal

 

I urge you to forward this email to all State Chief Ministers , requesting them rush their comments to you by 30 May

 

With regards,

Hemen Parekh

hcp@RecruitGuru.com   /  15  May  2020