Eighties provided the Black Swan to the Indian Economy. As the decade drew to a close the most improbable thing happened. For the first time the economic narrative of India changed and the journey from a public sector economy to a market driven economy began.

Why Black Swan? Because, before the discovery of Australia, everybody thought that a swan was white. When Australia was discovered it was seen that there was a black bird that actually resembled a swan. It literally shook a global belief by catching it by the scruff of its neck and forcing a new reality through the gullet of the civilisation. Much later, around 2008, Nassim Nicholas Taleb -- essayist, statistician, trader and many more – coined the term to explain defining trigger for changes in the history of civilisation. And all those changes were higly improbable till the time it happened.

Similarly, till India stepped into the nineties nobody could think that the Indian govenrment would ever withdraw from controlling the economy the way it used to, that the subsidy regime would slowly shrink and the defining role of the government in the alleviation of poverty would take up a totally new hue in the form of spreading the culture of entrepreneurship. Self sufficiency from being a macro concept would metamorphose into ‘to each on his own’ with the government and the private initiative becoming partner in spreading entrepreneurship at the base of the pyramid. It happened because of the huge financial crisis – the Black Swan – that the Indian government faced at the beginning of the nineties and was forced to change its strategy of development through direction and allow the market to take over the direction setting role.

With the liberalisation, microfinance emerged, among others, as an important partner of the government in the task of reshaping the economy. The microfinance industry’s task, over a period of time evolved into that of a facilitator of not only channeling financial capital but also holding the hand of the poor in learning the use of money and thereby becoming self sufficient.

But the process also needed funding institutions that would specialise into providing funds to the microfinance industry in a dedicated way meant for the defined addressees. Lauched on 8th April, 2015, Pradhan Mantri Mudra (Micro Unit Development and Refinance Agency Ltd) Yojana is an attempt towards this end. This scheme aims at channeling upto Rs 10 lakhs per ticket to micro enterprises for manufacturing, processing, trading and services. The defined addressees by gender in the scheme are women who are the focus of the microfinance industry.

There has also been an important develoment that would go a long way to help the microfinance industry. The credit guarantee fund scheme for Stand-up India has also been enhanced from Rs 1 crore to Rs 2 crore extended to NBFCs for collateral free for medium and small enterprises loan.

The data available from the day MUDRA scheme was lauched till 2017 – i.e. the first two years – shows that 7.5 crore loan accounts availed credit exceeding Rs 3.17 lakh crore. Sanctions and lending support made during FY 2017 amounted to Rs 3708.94 crore and Rs 3337.20 crore respectively.

In short, with the new paradigm of poverty alleviation through the creation of micro entrepreneurs, Indian economic dynamics is showing a tremendous resilience and astuteness in generating appropriate institutions in promoting the cause of creating a virtuous cycle of prospertity by challenging the apparently unconquarable vicious cycle of poverty.