The programme is a hybrid of two programmes: the Prime Minister’s RojgarYojana and the Rural Employment Generation Program. The goal is to give continuous and sustainable employment to a broad section of the country’s traditional and potential craftsmen, rural and urban jobless youngsters. The initiative encourages financial institutions to participate in order to increase credit flow to micro-enterprises.The Prime Minister’s Employment Generation Programme (PMEGP) is a credit-linked subsidy programme launched by the Indian government in 2008. PMEGP is the result of the combination of two schemes: the Prime Minister’s RojgarYojna and the Rural Employment Generation Programme. This initiative aims to provide self-employment possibilities in the non-farm sector by assisting jobless youth and traditional craftspeople in establishing micro-enterprise firms.
The Prime Minister’s Employment Generation Programme is managed by the Ministry of MSME (PMEGP). The PMEGP Scheme is being administered at the national level by the Khadi and Village Industries Commission (KVIC). The Scheme is being implemented at the state level through State Khadi and Village Industries Commission Directorates, State Khadi and Village Industries Boards, District Industries Centres, and banks.
Objectives of Prime Minister’s Employment Generation Programme
- Creation of long-term and continual self-employment options in the country’s urban and rural locations
- Providing long-term and consistent employment to a significant number of jobless rural and urban youngsters, traditional and future craftspeople, via the formation of micro-enterprises
- Facilitating financial institution engagement in order to increase credit flow to the micro sector
- Individuals above the age of 18 must pass Standard VIII to work on projects worth more than Rs 5 lakh in the service sector and more than Rs 10 lakh in the manufacturing sector.
- Institutions incorporated under the Societies Registration Act of 1860
- Cooperative societies focused on production
- Self-help organisations and charitable trusts
SALIENT FEATURES OF THE SCHEME
- The Scheme is implemented through the Khadi and Village Industries Commission, State Khadi and Village Industries Commission Directorates, State Khadi and Village Industries Boards, and District Industries Centres and banks in urban and rural areas in a 30:30:40 ratio between the Khadi and Village Industries Commission, Khadi and Village Industries Boards, and DIC. respectively
- Assistance under the PMEGP is only accessible to newly founded units.
- There is no income limit for establishing projects.
- Existing units or units that are currently receiving any type of government subsidy (State or Central) are ineligible.
- This plan is open to any industry, including coir-based initiatives (excluding those on the negative list).
- The scheme’s per capita investment should not exceed Rs 1 lakh.
- The scheme’s per capita investment should not exceed Rs 1 lakh in plain regions and Rs 1.5 lakh in hilly areas.
- This restriction applies to projects costing up to Rs 10 lakh in the service sector and Rs 25 lakh in the industrial sector.
According to the Khadi and Village Industries Commission Act 2006 – Scheme, a rural area is defined as any village and includes any town. The population shall not exceed 20,000 people, or any other quantity specified by the Central Government from time to time. Only District Industries Centres (DIC) are included in the urban area.
a list of negative actions
- Businesses and industries involved in the processing/production/sale of meat or intoxicant commodities like as pan/beedi/cigarettes, among others.
- Businesses and industries associated with sericulture, cultivation, floriculture, and horticulture.
- Manufacturing of containers made of recycled plastic/polythene carry bags with a thickness of less than 20 microns
- The Khadi Certification Rule applies to the processing of pashmina wool and other items that include hand spinning and hand weaving.
- Transport in the countryside (except houseboat, shikara, tourist boat in Andaman & Nicobar Islands and in Jammu & Kashmir, auto rickshaw and cycle rickshaw.) CNG auto rickshaws will be authorised only in the Andaman and Nicobar Islands and the country’s North Eastern region with the previous consent of the Chief Secretary of the State based on merit.
The margin money contribution is 5% of the project cost for special category borrowers and 10% for general category borrowers. Illustration: If Miss Nishitha applies to XYZ bank for a loan of Rs 8 lakh, the bank may only finance 80% of the loan amount (i.e. Rs 6,40,000/-). The remaining 20% (Rs 1,60,000/-) is referred to as margin money, and Nishita must make provisions for it.
General Category: The qualifying subsidy is 25% of the project cost in rural regions and 15% in urban areas.
Special Category: The qualifying subsidy is 35% of the project cost in rural regions and 25% in urban areas.
HOW DOES THIS SCHEME WORK
Assume Mr. Don, a fresh new entrepreneur from Bangalore City, wishes to apply for the PMEGP scheme. Rs 10 lakh is the estimated project cost. Mr. Don’s Contribution (Required by the PMEGP) – Rs 1 lakh (10 percent of Rs 10 lakh) Mr. Don received a sum of Rs 9 lakh. Note: The margin money (i.e. 15% of the Project Cost – Rs 1,50,000/-) withheld by the bank would be returned to the bank by KVIC within 24 hours of the PMEGP application being accepted. As a result, entrepreneurs like Mr. Don may simply obtain the financing they need to move forward with their enterprise. Banks will fund capital expenditure with a term loan and operating capital with cash credit. Projects may also be funded.After deducting the (Margin Money) subsidy and the owner’s contribution, the bank credit will range between 60 and 75 percent of the cost. Though banks would claim subsidies based on capital expenditure forecasts in the project report, Margin Money can only be obtained based on actual capital expenditure, with any excess being repaid to KVIC. Working Capital should be used in such a way that it reaches 100 percent of the cash credit limit within three years of the margin money lock-in term and not less than 75 percent of the sanctioned maximum.
The rate of Interest and Repayment Schedule
The normal interest rate is applicable to the enterprise from time to time. The Repayment Schedule ranges from 3 -7 years.
No collateral security nor any third party guarantee is insisted here. Any assets created from the bank loan should be hypothecated to Bank.
At the national level, KVIC is the nodal agency. The scheme will be implemented through Khadi and Village Industries Commission, Khadi and Village Industries Boards and DIC in both rural and urban areas.
A 2 weeks training period is mandatory for all the beneficiaries.