The Prime Minister's Employment Generation Programme, or PMEGP, a credit-linked subsidized initiative, was launched by the Ministry of Micro, Small, and Medium Enterprises (MSME) in the year 2008. This programme encourages the creation of businesses that provide for oneself in both urban and rural settings. This loan intends to give conventional and aspiring artisans who are only employed seasonally long-term and stable work options. This plan also intends to reduce urban migration through the establishment of self-employment opportunities. The programme allows for various projects to get subsidies based on different criteria, and the rate of interest is somewhere between 11% and 12%.
Did you know?
More than 36,000 new micro-enterprises were established with a subsidy of ₹1,150 crores in FY 2021–2022.
What is PMEGP Scheme?
The credit-linked subsidy scheme known as PMEGP, or the Prime Minister's Employment Generation Program, was initially introduced in 2008. The Pradhan Mantri's Rozgar Yojana and the Rural Employment Generation Initiative, two prior identical government programmes with related objectives and advantages, were combined to create the PMEGP. The main goal of these two programmes and the PMEGP plan is to give Indian entrepreneurs in the rural and urban areas the much-needed financial incentive they need to start their firms and businesses.
The programme aims to support new businesses in the community and encourage employment among the youths of the nation as a consequence of these ventures. The Ministry of Micro, Small, and Medium Enterprises is in charge of managing the PMEGP, whereas the Khadi and Village Industries Committee is in charge of overseeing its countrywide implementation. District industries and banks are in charge of managing the programme at the district level.
Also Read: What Is Collateral and How to Get a Collateral-Free Loan?
Objectives of the PMEGP Scheme
The following are the main objectives of the PMEGP scheme:
- Creating jobs in India's rural and urban areas by launching a variety of new initiatives, microbusinesses, and undertakings.
- Giving craftsmen and dispersed groups of young people without jobs access to a single framework and supply of self-employment options.
- By giving them permanent forms of work within their community, to reduce the need for people in rural areas to relocate and seek economic possibilities in metropolitan regions. This helps traditional craftspeople and groups of unemployed youths who can only find seasonal jobs sporadically throughout the year.
- To expand the capability and chances for generating revenue for craftsmen, as well as the employment levels in both rural and urban locations.
PMEGP Loan Eligibility Criteria
The PMEGP programme seeks to significantly alter the nation's employment and entrepreneurial environments. Therefore, the PMEGP scheme has precise requirements for aspiring business owners or entrepreneurs who could be qualified for this financially beneficial opportunity. The PMEGP lending scheme's qualifying requirements for individuals and organisations are detailed below.
- The recipient must be over the age of 18.
- For those requesting a PMEGP loan for a manufacturing-related venture with a budget over ₹10 lakhs, they must have completed and passed at least Class 8. If a project's cost exceeds ₹5 lakh and is in the commercial or service sector, the same financing requirements apply.
- PMEGP financing is also available to self-help organisations. Nonetheless, this is dependent on the organization not having used any benefits from any other plan.
- PMEGP loans are available to societies that have been registered under the Societies Registration Act of 1860.
- Cooperative Associations operating in the production sector.
- Charitable foundations
Also Read: Learn about Short Term Loans - Short Term Loan Period, Advances & Types
How to Apply for PMEGP Loan Online?
After confirming your eligibility and gathering all required documentation, the only step left to take to apply for a PMEGP loan is the registration procedure. The straightforward procedures you must take to submit an online PMEGP application are listed below:
- Start by signing in to the PMEGP program's official E-portal webpage on the KVIC portal.
- You will be redirected to an online application page after selecting the appropriate choice from the list on the website, whether it is for an individual or a non-individual.
- Complete the form with the necessary information.
- When finished, press the "Save Application Data" button at the page's bottom.
- The last step entails uploading the required files and submitting the application.
- All application-related information will be sent to the contact information you give. The appropriate PMEGP credit will then be handled for you.
What Does a PMEGP Loan Offer
The PMEGP loan is a form of term loan provided to businesses under the PMEGP plan at a fixed interest and subsidies on the total project costs. A PMEGP loan's exact terms depend on a variety of variables. The following are a few of the most significant specifics about the level of financial help a PMEGP loan provides:
Loan Amount:
Depending on the industry and total project budget, the Indian government grants different PMEGP loan balances. Up to ₹10 lakhs in PMEGP Lines of credit are available for initiatives in the commercial or service sectors. This loan's maximum amount for manufacturing-related projects is ₹25 lakhs.
Self-Investment:
The PMEGP financing programme also calls for the entrepreneur to contribute financially to the venture. This percentage is specified as 10% for the General category and as 5% for the Special category. Therefore, if your project is under the top limit, the government may approve up to 90 to 95 % of it.
Subsidy (Rural):
In addition to the PMEGP loan, the programme also provides a set amount of buffer money or a subsidy for your operation. This subsidy proportion for rural businesses is 25% for the General category applicants and 35% for the Special category applicants.
Subsidy (Urban):
The subsidy ratio for urban firms is 15% for the General category or 25% only for the Special category. Aside from these many variables, the interest rates on all PMEGP loans are typically between 11 and 12 % annually. Additionally, a PMEGP loan has a 3-to-7-year repayment schedule with a six-month deferment. According to Reserve Bank of India standards, no form of collateral is required for any PMEGP loans of up to₹10 lakhs.
Also Read: Top Business Loans for Women in India - A List of Small Business Loans for Women
Conclusion:
The Government of India's flagship programme, PMEGP, has a vast area to deal with in order to provide job prospects, especially affecting the conventional ways of sustainable living. The Panchayats will be used to identify the potential recipients, and several agencies will be involved all the way down to the lowest levels of governance in order for the plan to be successfully implemented. The implementation of the PMEGP plan would guarantee that many young people who are jobless engage in productive work and guarantee demographic stabilization of the rural and urban sections of the nation.
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