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Artisan Credit Push Continues Under PM Vishwakarma

By Pratishtha Sehgal --
Tuesday, 03 Mar, 2026

The Union Budget 2026–27 has reduced funding for the PM Vishwakarma scheme, even as banks continue to receive and process a large number of loan applications under the programme. The decision has sparked discussion because the scheme is still in its early growth stage. Launched in September 2023, it aims to help traditional artisans and small craft-based businesses by providing affordable loans, skill training, modern tools, and support to reach wider markets.

In the latest Budget, the allocation has been lowered to about ₹3,861 crore from ₹5,000 crore last year. This suggests a slower pace of direct spending, even though interest and demand for the scheme remain strong among artisans and micro entrepreneurs.

At the implementation level, activity has been steady. Banks have processed most of the applications they received, showing strong outreach. However, only a little over one-third of these applications have been approved so far. The positive sign is that once a loan is sanctioned, it is usually disbursed without much delay. This indicates that the main challenge lies in meeting eligibility and documentation requirements rather than in the final delivery of funds.

Among banks, State Bank of India has handled the largest share of applications, sanctioning around 1.6 lakh loans and releasing most of them. Punjab National Bank and Canara Bank have also processed significant volumes and maintained strong disbursement levels after approvals.

Bankers say that many applicants, especially first-time borrowers and artisans working informally, face difficulties with paperwork, credit history, and meeting bank norms. Regional rural banks, which cater to many small and remote businesses, have seen lower approval ratios, highlighting the need for more handholding and simpler processes to ensure the scheme reaches those who need it the most.

Commenting on the lower allocation, Mr. Vinod Kumar, President of the India SME Forum, said the reduction reflects phased implementation rather than any dilution of intent. “The lower allocation for the Vishwakarma Scheme reflects phased implementation and the shift of credit support to banking and guarantee mechanisms rather than any dilution of intent. However, traditional artisans need more than credit alone; sustained investment in skills, tools, market access and branding is essential for durable livelihood outcomes,” he said. Mr. Kumar added that as on-ground execution gathers momentum, future budgets should reinforce the scheme to fully realise its potential in formalising and strengthening India’s artisan economy.

The FY27 allocation appears to signal a transition phase, where emphasis is increasingly placed on institutional credit delivery and guarantees rather than upfront fiscal outlays. How effectively this approach translates into higher approvals, wider coverage, and long-term livelihood outcomes for artisans will remain a key metric for evaluating the scheme’s progress in the coming years.

Artisan Credit Push Continues Under PM Vishwakarma. The Union Budget 2026–27 has reduced funding for the PM Vishwakarma scheme, even as banks continue to receive and process a large number of loan applications under the programme. The decision has sparked discussion because the scheme is still in its early growth stage. Launched in September 2023, it aims to help traditional artisans and small craft-based businesses by providing affordable loans, skill training, modern tools, and support to reach wider markets.

In the latest Budget, the allocation has been lowered to about ₹3,861 crore from ₹5,000 crore last year. This suggests a slower pace of direct spending, even though interest and demand for the scheme remain strong among artisans and micro entrepreneurs.

At the implementation level, activity has been steady. Banks have processed most of the applications they received, showing strong outreach. However, only a little over one-third of these applications have been approved so far. The positive sign is that once a loan is sanctioned, it is usually disbursed without much delay. This indicates that the main challenge lies in meeting eligibility and documentation requirements rather than in the final delivery of funds.

Among banks, State Bank of India has handled the largest share of applications, sanctioning around 1.6 lakh loans and releasing most of them. Punjab National Bank and Canara Bank have also processed significant volumes and maintained strong disbursement levels after approvals.

Bankers say that many applicants, especially first-time borrowers and artisans working informally, face difficulties with paperwork, credit history, and meeting bank norms. Regional rural banks, which cater to many small and remote businesses, have seen lower approval ratios, highlighting the need for more handholding and simpler processes to ensure the scheme reaches those who need it the most.

Commenting on the lower allocation, Mr. Vinod Kumar, President of the India SME Forum, said the reduction reflects phased implementation rather than any dilution of intent. “The lower allocation for the Vishwakarma Scheme reflects phased implementation and the shift of credit support to banking and guarantee mechanisms rather than any dilution of intent. However, traditional artisans need more than credit alone; sustained investment in skills, tools, market access and branding is essential for durable livelihood outcomes,” he said. Mr. Kumar added that as on-ground execution gathers momentum, future budgets should reinforce the scheme to fully realise its potential in formalising and strengthening India’s artisan economy.

The FY27 allocation appears to signal a transition phase, where emphasis is increasingly placed on institutional credit delivery and guarantees rather than upfront fiscal outlays. How effectively this approach translates into higher approvals, wider coverage, and long-term livelihood outcomes for artisans will remain a key metric for evaluating the scheme’s progress in the coming years.