Origin
- The Prime Minister’s Employment Generation Programme (PMEGP) was announced by the Prime Minister of India on August 15, 2008.
- It was created by merging the Prime Minister’s Rojgar Yojana (PMRY) and the Rural Employment Generation Programme (REGP).
About
- Ministry:
- The Ministry of Micro, Small and Medium Enterprises (MoMSME)
- The Prime Minister’s Employment Generation Programme (PMEGP) is a significant initiative by the Government of India aimed at generating employment opportunities in rural and urban areas through the establishment of micro-enterprises.
- It provides financial assistance to entrepreneurs in order to help them set up small businesses, which, in turn, helps to curb unemployment and promote local development.
Overview of PMEGP
Launched in 2008, the PMEGP is a credit-linked subsidy scheme that targets the creation of new employment opportunities in both rural and urban areas. The program is implemented by the Khadi and Village Industries Commission (KVIC) under the Ministry of Micro, Small & Medium Enterprises (MSME), with funding from several banks and financial institutions.
Key Objectives
- Employment Generation:
- The primary goal of PMEGP is to create sustainable employment opportunities for youth, particularly in rural areas.
- Entrepreneurship Development:
- Encouraging young and aspiring entrepreneurs by providing them with financial support and capacity-building assistance to start their own businesses.
- Economic Development:
- By fostering the growth of micro, small, and medium enterprises (MSMEs), the scheme aims to promote local economic development.
- Promote Rural Industrialization:
- It helps promote indigenous products and local industries, thus encouraging rural industrialization and reducing migration to urban areas for work.
Eligibility Criteria
- Individual Applicants:
- Indian citizens aged between 18 and 35 years (with a relaxation of 5 years for special categories like SC/ST, women, and differently-abled persons).
- The applicant must not have any prior criminal record.
- Type of Beneficiaries:
- Entrepreneurs, Self-Help Groups (SHGs), Co-operative Societies, and institutions with a focus on creating employment opportunities.
- Educational Qualification:
- While the program does not impose strict educational requirements, the applicant must have a basic understanding of business operations.
- Existing Units:
- Applicants must not have already availed themselves of assistance under other government schemes for the same project.
How the Scheme Works ?
PMEGP provides financial support to set up a new micro-enterprise in the manufacturing, service, or agro-based sectors. The financial assistance is provided in the form of:
- Subsidy:
- A percentage of the total project cost is given as a subsidy.
- Loan:
- The remainder of the project cost is financed through a loan from a recognized financial institution (e.g., nationalized banks, private sector banks).
Subsidy Amount
- General Category Applicants:
- 15-35% of the project cost (depending on location and category of the applicant).
- Special Categories (SC/ST, women, ex-servicemen, differently-abled persons):
- 25-50% of the project cost (again, based on location).
- The subsidy amount is subject to a maximum limit depending on the size of the project.
Project Cost and Loan Assistance
- The maximum cost of a project that can be supported under PMEGP varies by sector.
- For manufacturing, the maximum project cost is Rs. 25 lakhs.
- For service-oriented projects, it is Rs. 10 lakhs.
- The balance of the project cost (after subsidy) is funded through a loan provided by financial institutions.
Implementation Process
- Application Submission:
- The first step is to submit an online application via the PMEGP portal or directly to the implementing agencies, such as KVIC, KVIB, or DIC (District Industry Centre).
- Project Approval:
- After submission, the project proposal is evaluated based on its viability, financial feasibility, and the applicant’s business plan.
- Loan Sanction:
- Once the project is approved, the applicant must approach a bank or financial institution to obtain the loan.
- Disbursement of Subsidy:
- Upon successful completion of the setup, the subsidy is disbursed directly to the bank, and the loan is credited to the applicant’s account.
- Monitoring & Reporting:
- The scheme ensures continuous monitoring and reporting through quarterly and annual reviews to track the progress of funded projects.
Types of Projects Eligible for PMEGP
- Manufacturing:
- Textile industries, food processing, chemicals, electronics, and many other sectors that involve the production of goods.
- Service Sector:
- Hospitality, retail, IT services, education, and other service-based enterprises.
- Agro-based:
- Projects related to agriculture, such as organic farming, dairy farming, beekeeping, food processing, etc.
Key Benefits of PMEGP
- Financial Assistance:
- Provides easy access to funding with low-interest rates and a government-backed subsidy.
- Skill Development:
- The program often includes training programs to enhance the entrepreneurial skills of applicants.
- Employment Generation:
- One of the most direct benefits is the creation of job opportunities for the local population.
- Boost to Local Economy:
- Small businesses contribute to the local economy, ensuring that the economic benefits stay within the community.
- Ease of Process:
- Simplified application and approval processes make it easier for aspiring entrepreneurs to access financial support.
Programs under PMEGP
- Margin money subsidy
- A subsidy on bank loans for setting up new microenterprises. The subsidy ranges from 15% to 35%.
- Credit Guarantee Scheme
- A scheme that provides collateral-free loans to micro and small enterprises. The scheme is implemented by the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).
- Enterprise Development Loans
- A program that provides collateral-free loans to artisans and craftspeople. The loans are provided at a concessional rate of interest.
Challenges and Areas for Improvement
- Lack of Awareness:
- One of the challenges is the low level of awareness about the scheme in rural areas. Many potential beneficiaries are unaware of how to apply or the benefits they can avail.
- Complicated Documentation:
- The documentation required can sometimes be overwhelming, especially for first-time applicants.
- Delayed Processing:
- Some applicants report delays in project approval or disbursement of loans, which can impact the timely setup of businesses.
- Dependency on Banks:
- While the scheme offers financial assistance, the dependency on banks and financial institutions for loan approval can sometimes create hurdles for applicants.
Conclusion
- The Prime Minister’s Employment Generation Programme has proven to be a crucial initiative in reducing unemployment and promoting entrepreneurship in India.
- By offering financial support and guidance, it encourages the establishment of small businesses that generate both direct and indirect employment.
- However, to ensure greater success, there needs to be continued awareness-building, simplification of procedures, and more effective outreach, particularly in rural areas.
For aspiring entrepreneurs, PMEGP offers a fantastic opportunity to kick-start their business journey with financial aid and support, contributing not only to personal success but also to national economic growth.
