Context:

• The recent expansion of the Pradhan Mantri MUDRA Yojana (PMMY) to include homestays marks a significant development for the tourism sector in Himachal Pradesh and across India.

Key Points:

• Announced in the 2025 Union Budget, this initiative aims to bolster small businesses within the hospitality industry, particularly in rural and semi-urban areas.

MUDRA Loans

Launched in 2015, the Pradhan Mantri MUDRA Yojana was designed to provide financial assistance to non-corporate, non-farm small and micro enterprises. The scheme categorizes loans into three segments:

1. Shishu: Loans up to ?50,000.
2. Kishore: Loans ranging from ?50,001 to ?5 lakh.
3. Tarun: Loans from ?5 lakh to ?10 lakh.

The recent focus on homestays primarily falls under the Shishu category, with an estimated loan opportunity of ?1,500 crore aimed at facilitating the establishment and expansion of these accommodations. This financial support is crucial for aspiring entrepreneurs in the hospitality sector, particularly in a state like Himachal Pradesh, where tourism is a significant economic driver.

Implications for local economies

The introduction of MUDRA loans for homestays is expected to empower local entrepreneurs by providing them with the necessary capital to start or enhance their hospitality businesses. This initiative is particularly vital in Himachal Pradesh, which has witnessed a surge in tourist arrivals, leading to increased demand for diverse accommodation options, including homestays.

• Job creation: By supporting small businesses through accessible financing, this initiative is poised to create numerous job opportunities within local communities. As homestays proliferate, they will require staff for various roles, from management to housekeeping, thereby contributing to employment generation in rural areas.
• Economic diversification: The growth of homestays can lead to economic diversification in rural regions, reducing dependence on traditional agriculture and providing alternative sources of income for local families.
• Cultural exchange: Homestays offer tourists a unique opportunity to experience local culture and traditions, fostering cultural exchange and enhancing the overall tourist experience. This can lead to increased visitor satisfaction and repeat tourism.

Infrastructure development and skill training

• To complement the expansion of homestays, the government plans to develop 50 key tourist sites in collaboration with state governments.
• This includes improving transport connectivity and other infrastructure, which will facilitate easier access to homestays and enhance the overall tourist experience in Himachal Pradesh.
• Additionally, to ensure that local entrepreneurs can effectively manage their homestays, the government has proposed comprehensive skill development programs.
•  Specialized training will be provided at Institutes of Hospitality Management, equipping individuals with essential skills for operating successful hospitality ventures. This training will cover areas such as customer service, marketing, and financial management, ensuring that homestay operators can deliver high-quality experiences to guests.