Performance of MUDRA Loan Before and After COVID-19: A Study with Special Reference to West Bengal

The Pradhan Mantri MUDRA Yojana (PMMY) has emerged as a flagship financial inclusion program in India, aimed at supporting micro and small entrepreneurs through collateral-free loans across three categories—Shishu, Kishore, and Tarun. West Bengal, with its dense population and reliance on microenterprises, has been one of the top-performing states under MUDRA. However, the COVID-19 pandemic created unprecedented disruptions in the flow of credit to micro, small, and medium enterprises (MSMEs), warranting a comparative analysis of loan performance before and after the crisis. This paper examines the performance of MUDRA loans in West Bengal during the period 2017–2023, segmented into pre- COVID (2017–2020), COVID (2020–2021), and post-COVID recovery phases (2021–2023). Using secondary data from RBI, PMMY state-wise reports, and Ministry of Finance publications, the study analyzes loan disbursement patterns, category- wise distribution, and borrower profiles. The findings reveal that while disbursement levels dropped marginally in 2020–21 due to lockdown-induced disruptions, the scheme showed remarkable resilience with a sharp rebound in subsequent years, surpassing pre-COVID figures. West Bengal’s disbursed amount rose from ₹32,550 crore in 2017–18 to ₹39,130 crore in 2019–20, dipped slightly during COVID-19 (₹33,020 crore in 2020–21), and reached ₹48,410 crore by 2022–23. A notable shift was observed from Shishu loans to higher-ticket Kishore and Tarun loans, indicating business expansion and credit deepening in the state’s MSME sector. These insights have significant policy implications for strengthening financial inclusion, credit delivery, and resilience of micro-entrepreneurs in times of crisis.