PM Vishwakarma allocation cut in FY27 despite steady bank loan processing

Budgetary support for PM Vishwakarma has been cut in FY27 even as banks process lakhs of artisan loan applications, raising questions on credit absorption and scheme scale-up

The government has significantly scaled down budgetary support for the PM Vishwakarma scheme in FY27, even as public sector banks and regional rural banks continue to process a large volume of loan applications under the flagship artisan-focused programme.

 

As per Union Budget documents, the Budget Estimate for PM Vishwakarma in FY27 has been reduced to Rs 3,861 crore, marking a sharp cut from the Rs 5,100 crore provided in FY26. The decline becomes more pronounced when compared with the Revised Estimate of Rs 4,400 crore for FY26, indicating a year-on-year contraction in allocations despite the scheme being in its early expansion phase. 

Launched in September 2023, the PM Vishwakarma scheme is designed to provide holistic support to traditional artisans and craftspeople, including collateral-free credit, skill training, toolkits and market access. 

“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. As on-ground execution gathers momentum, future budgets must reinforce the scheme to fully realise its potential in formalising and strengthening India’s artisan economy,” said Vinod Kumar, president of the India SME Forum.

 

As of early November 2025, public sector banks had received over 12.5 lakh applications, of which close to 98 per cent were processed. However, the conversion of processed applications into sanctions has remained moderate, with only about 4.35 lakh cases, or 36 per cent, receiving approval. Actual disbursements stood at around 3.71 lakh accounts, translating into an 85 per cent disbursement rate of sanctioned loans.

 

Among individual banks, State Bank of India emerged as the largest contributor in absolute terms, having received more than 5.3 lakh applications. The bank sanctioned around 1.64 lakh cases and disbursed loans to over 1.45 lakh beneficiaries. Punjab National Bank and Canara Bank also reported significant volumes, with both banks processing nearly all applications received and maintaining high disbursement ratios once loans were sanctioned.

 

Despite the strong processing performance, bankers pointed out that eligibility checks, documentation issues and credit appraisal norms have constrained sanction rates, particularly for first-time borrowers and informal artisans who lack prior banking histories.

 

Regional rural banks, which play a critical role in rural and semi-urban outreach, have shown a more subdued trend. From the launch of the scheme till December 2025, RRBs received about 1.92 lakh applications, but only around 27 per cent of processed cases were sanctioned.

 

“Almost all applications received were processed, reflecting operational efficiency. The fall in sanction rates has raised concerns around credit absorption, appraisal capacity and borrower readiness in rural markets,” said a senior bank official.