In a significant move aimed at bolstering the economic backbone of its cities and towns, the Himachal Pradesh government has announced the expansion of a key welfare scheme for small shopkeepers to urban areas. The Mukhya Mantri Laghu Dukandar Kalyan Yojana, which was previously available only in rural regions, will now be implemented across all Urban Local Bodies (ULBs) in the state as the 'Mukhya Mantri Laghu Dukandar Kalyan Yojana-Shahri'.
Financial Lifeline for Urban Small Businesses
Chief Minister Sukhvinder Singh Sukhu stated that the decision, formalized through a recent notification, fulfills a promise made in the state's Budget for 2025-26. He highlighted that a vast number of small traders in urban centers run micro-enterprises but frequently struggle with financial instability and lack access to institutional support. This strain has led many to default on bank loans, turning their accounts into Non-Performing Assets (NPAs).
The newly extended scheme is designed to provide crucial relief. It targets distressed small shopkeepers with an annual turnover under ₹10 lakh who have taken business loans from banks and have seen those loans declared as NPAs. The state government will facilitate a One Time Settlement (OTS) assistance of up to ₹1 lakh through the concerned banks, with the entire OTS amount being borne by the state exchequer.
Eligibility and Implementation Details
The scheme outlines clear criteria for beneficiaries. Shopkeepers whose total outstanding amount (principal plus interest) is up to ₹1 lakh will receive a full settlement. For those with dues exceeding ₹1 lakh, the government will provide ₹1 lakh as OTS support, and the beneficiary must arrange the remaining balance. Importantly, the original loan amount availed should not have exceeded ₹10 lakh.
Chief Minister Sukhu emphasized that the initiative is built on principles of transparency and ease of access. To ensure maximum benefit reaches the intended recipients, the government has waived interest for the intervening period and prohibited any processing or administrative charges.
The scheme casts a wide net, aiming to benefit a diverse range of urban micro-entrepreneurs, including:
- Fruit and vegetable vendors
- Tea stall and dhaba owners
- Barbers, cobblers, and tailors
- Paan and chaat vendors
- Grocery and mobile repair shop owners
- Garage owners and street vendors
Key Conditions and Application Process
The relief will apply to collateral-free business loans taken between April 1, 2020, and March 31, 2025. However, cases involving wilful default, fraud, or malfeasance are explicitly excluded. Banks have been tasked with identifying such cases to filter out undeserving applicants.
Loans covered under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) or similar guarantee trusts are eligible only if the uncovered amount is less than ₹1 lakh.
Prospective applicants must be permanent residents of Himachal Pradesh, above 18 years of age, and no family member should be in regular government service. Applications are to be submitted to the concerned Urban Local Body, which will verify and forward them to banks. Banks will then submit monthly OTS claims via a Nodal Bank to the state's Urban Development Department for reimbursement.
This urban expansion of the shopkeeper welfare scheme marks a proactive step by the Himachal Pradesh government to alleviate financial distress at the grassroots of the urban economy, providing a structured path out of debt for thousands of small business owners.
