The Prime Minister Employment Generation Programme (PMEGP), a credit-linked incentive scheme to provide financial assistance to individuals setting up new enterprises, has empowered as many as 2.91 lakh people and granted subsidies to 36,391 new micro-enterprises in the current financial year so far.
As per the latest official data, a subsidy of ₹1,150 Crore was extended to over 36,000 micro-enterprises and 2,91,656 jobs were created through these units during a 7-month period of the financial year 2021-22.
What is PMEGP?
PMEGP or Prime Minister Employment Generation Programme is a Government-backed subsidy scheme under which beneficiaries get a subsidy amounting to 15-35% of the project cost from the government while the beneficiary contributes 5-10% of the contract sum. The remaining amount is provided to the entrepreneur by the collaborating banks as term loans.
PMEGP is a merger of two schemes - Prime Minister’s Rojgar Yojna (PMRY) and Rural Employment Generation Programme (REGP).
The Scheme aims to generate employment opportunities in rural and urban areas by setting up self-employment ventures in the non-farm sector. Traditional artisans and unemployed youth are the focus of this scheme so as to halt the migration of rural youth to urban areas in search of work.
PMEGP is implemented by KVIC (Khadi and Village Industries Commission) which acts as the nodal agency for this scheme at the National level. The KVIC directs government subsidy through collaborating banks for disbursal to the beneficiaries directly into their bank accounts.
Scope
The maximum cost of the project or unit which is allowed under PMEGP for assistance in the manufacturing sector is ₹25 lakhs. In the business or service sector, the maximum admissible amount is ₹10 lakhs under this scheme. Only one person from a family is eligible for obtaining financial assistance under the scheme.
The assistance under the scheme will not be available to activities indicated in the negative list under the scheme.
The beneficiary’s rate of the subsidiary for the general category is 15% in urban areas and 25% in rural areas. The beneficiary’s rate of the subsidiary for the special category is 25% in urban areas and 35% in rural areas.
Eligibility
Any individual(s) above 18 years of age is/are eligible to apply for this scheme. The individual needs to have cleared at least 8th standard for the projects, in the manufacturing sector which cost above ₹10 lakh and in the business or service sector which cost above ₹5 lakh.
However, only new projects are considered for sanction under PMEGP. Other institutions that are eligible are:
- Self-help groups
- Institutions registered under Societies Registration Act, 1860
- Production-based Co-operative Societies, and
- Charitable Trusts
Any unit/s existing under PMRY, REGP or any other scheme of Government of India or State Government are not eligible. If the units have already availed Government Subsidy under any other scheme of Government of India or State Government, they will not be considered under this scheme.
How does PMEGP work?
PMEGP loans are available for 3-7 years. Due to the pandemic, a 6-month freeze has been offered by PMEGP loan lenders on all loans accepted under the PMEGP scheme.
Selection of Beneficiaries
At the district level, the beneficiaries will be identified & selected by a Task Force consisting of KVIC/State KVIB/ State DICs and Banks’ representatives and headed by the District Magistrate/Deputy Commissioner/Collector concerned.
Subsidy from KVIC and the finance from banks depends on the cost of the project as shown in the details given below:
|
Bank Finance |
Subsidy from KYC |
Promoter’s Contribution |
||
|
Category of Beneficiary/Institution |
Urban Area |
Rural Area |
||
|
General |
90% |
15% |
25% |
10% |
|
Special |
95% |
25% |
35% |
5% |
Conclusion
A study done by KVIC in 2021 showed that 88 per cent of micro beneficiaries under PMEGP were ‘negatively affected’ due to the Covid pandemic while 57 per cent of beneficiaries had said they had to shut down their units temporarily during the pandemic. Nearly 30 per cent reported a decline in production and revenue. According to the latest estimates by the Centre for Monitoring Indian Economy (CMIE), over 5 million formal and informal workers had lost their jobs in October while only 400.77 million people were employed.
However, in spite of the Covid impact, a record 74,415 units had been set up in FY21 with the subsidy of ₹2,188 crore and employment to 5.95 lakh people since FY17, as per the available data. MSME Minister Narayan Rane said that “This is the best performance under PMEGP since its inception in 2008-09. Thus, the target fixed under PMEGP for the year 2020-21 has been surpassed despite COVID 19 challenges.
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