In India, MSMEs play a crucial role in minimizing the regional economic inequalities and encouraging balanced economic development by providing job opportunities in both urban and rural areas. They act as key catalysts for inclusive growth. Hence, the launch of the Mudra Scheme by the government of India to provide credit access to the MSMEs, has been a major contributor of job creation, mainly around developing and rural areas, by supporting small business expansion and GDP growth. Therefore, the study aims to provide overview on the Mudra scheme and the impact of increased Tarun loan limits on MSME growth. Also, by focusing on the evolution of the Mudra scheme, the study evaluates its performance since its inception in the year 2015 between Shishu, Kishore and Tarun categories and compares its performance between 2022–23 and 2023–24, with a focus on its impact on SC/ST, minority and women entrepreneurs. Thus, the study aims to provide recommendations to the stakeholders. Therefore, this study employs the secondary sources to find the relevant information and to provide an overview on the Mudra scheme. The findings reveal the importance of promoting inclusivity, capacity building initiatives, monitoring and evaluation, support mechanisms in enhancing the effectiveness of the Mudra scheme, supporting broader goals of economic growth and inclusivity in India.