The Andhra Pradesh government has distributed Rs 370 crore as interest-free loans among 3.75 lakh small business owners and street vendors across the state. Chief Minister Y.S. Jagan Mohan Reddy launched the second phase of the Jagananna Thodu scheme from the Tadepalli Camp office on Tuesday.
The Andhra Pradesh government had introduced the Jagananna Thodu scheme to provide interest-free loans of Rs 10,000 each to street and small vendors in the state.
These vendors who typically require daily working capital in the range of Rs 2,000 to Rs 5,000 are known to takes loans from moneylenders at exorbitant rates ranging from 3 to 10 per cent per day.
Speaking on the occasion, the CM said, “These small vendors most of the time don’t receive financial aid from banks because of the volatility of the market they represent, even if they do manage to secure a loan from other sources they pay exorbitant rates of interest. During my 3,648 km ‘padayatra’ I saw the circumstances these vendors battle with on a daily basis, I’m grateful for this opportunity to change that with this scheme.”
To improve the incomes of such small businessmen and street vendors, including traditional artisans, the state government decided to provide interest free loans worth Rs 10,000 under the Jagananna Thodu scheme. The main objective of the scheme is to free vendors from paying heavy interest on loans taken from private parties and falling into debt.
As per the scheme, the banks provide loans to all eligible members while the government bears the interest costs by reimbursing the interest amount to beneficiaries.
Phase-1 of the scheme was launched in November last year. The scheme is split into two phases, a cumulative of Rs 905 crore has been transferred into the accounts of 9.05 lakh small businessmen and street vendors in both phases.
Under the first phase Rs 535 crore was disbursed by the banks to 5.35 lakh beneficiaries. The interest reimbursement commitment of the Andhra Pradesh government is Rs 29.42 crore for Phase-1 and Rs 20.35 crore for Phase-2 per annum, resulting in a total of Rs 49.77 crores interest incurred and reimbursed.