Prime Minister’s Employment Generation Programme (PMEGP): Generating employment opportunities through the establishment of micro-enterprises

On the path of achieving the Prime Minister’s vision of a US$ 5 trillion-dollar economy by 2024-25, economic growth positively accelerated new employment opportunities in India. To provide self-employment opportunities in the nation by establishing microenterprises in the non-farm sector, the Ministry of MSME (MoMSME) is conducting the Prime Minister's Employment Generation Programme (PMEGP) through the Khadi and Village Industries Commission (KVIC). The scheme has been successful in creating rural employment across a wide range of social backgrounds. Since its commencement in 2008-09, about 8.34 lakh business units have received Margin Money subsidies totalling US$ 2.50 billion (Rs. 20,643 crores), producing estimated employment of more than 68 lakh individuals across the country. Over 80% of the PMEGP units have been established in rural regions, while about 50% of the units have been established by SC/ST/Women entrepreneurs. Thus, the government has approved the continuation of the PMEGP scheme with an outlay of US$ 1.62 billion (Rs.13,554.42 Crore) over the 15th Finance Commission cycle, for a five-year period spanning 2021-22 to 2025-26.

Moreover, over the last two years, out of the 1.27 crore enterprises listed on the Udyam Portal, more than 93,000 micro-enterprises have transformed into small businesses, and more than 10,000 small businesses have expanded into medium-sized businesses. The net addition in Employees' Provident Fund (EPF) subscriptions for FY22 was 58.7% higher than in FY21 and 55.7% higher than in the pre-pandemic year 2019. In FY23, net average monthly subscribers added under the Employees' Provident Fund Organisation (EPFO) increased from 8.8 lakh in April-November 2021 to 13.2 lakh in April-November 2022.

Prime Minister’s Employment Generation Programme (PMEGP)
The Government of India has approved the commencement of a new credit-linked subsidy programme known as the Prime Minister's Employment Generation Programme (PMEGP) by combining the two schemes that were in operation till March 31, 2008, namely the Prime Minister's Rojgar Yojana (PMRY) and the Rural Employment Generation Programme (REGP), for the generation of job opportunities through the establishment of micro companies in both rural and urban regions. The Ministry of Micro, Small and Medium Enterprises (MoMSME) will manage the PMEGP. This central sector scheme will be implemented at the national level by the Khadi and Village Industries Commission (KVIC), a statutory institution under the administrative jurisdiction of the Ministry of MSME. State KVIC Directorates, State Khadi and Village Industries Boards (KVIBs), District Industries Centres (DICs), and banks will administer the Scheme at the state level. To eventually distribute the government subsidy to the beneficiaries/entrepreneurs in their bank accounts, KVIC will route the money through the designated Banks.

Objectives

• To create job opportunities in both rural and urban areas of the country by establishing new self-employment ventures/projects/micro enterprises.
• To bring together widely dispersed traditional artisans/young people without jobs in rural and urban areas and to provide them with self-employment options in their location.
• To provide continuous and sustainable employment to a substantial segment of the country's traditional and prospective artisans, as well as rural and urban unemployed young, to discourage rural youth migration to metropolitan regions.
• To boost the wage-earning ability of workers and craftsmen and contribute to the rate of rural and urban employment growth.

Quantum and Nature of Financial Assistance

1). For setting up of new micro-enterprise (units)

Note:-

• The maximum project or unit cost that can qualify for a margin money subsidy in the manufacturing industry is US$ 60,610 (Rs. 50 Lakh).
• The maximum project/unit cost eligible for Margin Money subsidy in the service sector is US$ 24,244 (Rs. 20 Lakh).
• Banks will provide the remaining portion of the overall project cost (except their own contribution).
• If the entire project costs exceed US$ 60,610 (Rs. 50 Lakh) for the manufacturing sector or US$ 24,244 (Rs. 20 Lakh) for the service sector, the remaining amount may be provided by banks without any government subsidy.

2). 2nd loan for upgradation of existing PMEGP/REGP/MUDRA units

Note:-

• The maximum cost of a project/unit eligible for Margin Money subsidy in the manufacturing sector for upgradation is US$ 121,220 (Rs. 1 Crore). A maximum subsidy of US$ 18,183 (Rs. 15 Lakh) (US$ 24,244 (Rs. 20 Lakh) for the North-Eastern Region (NER) and Hill states).
• The maximum cost of a project/unit eligible for Margin Money subsidy in the service sector for upgradation is US$ 30,305 (Rs. 25 Lakh). The maximum subsidy amount will be US$ 4,545 (Rs. 3.75 Lakh) (US$ 6,061 (Rs. 5 Lakh) for NER and Hill states).
• Banks will provide the remaining portion of the overall project cost (except their own contribution).
• If the entire project costs exceed US$ 121,220 (Rs. 1 Crore) for the manufacturing sector or US$ 30,305 (Rs. 25 Lakh) for the service sector, the remaining amount may be provided by banks without any government subsidy.

Eligibility

• Any individual over the age of 18 years.
• There would be no income limit for creating a project under PMEGP.
• The beneficiaries must have at least an eighth-grade diploma to be eligible to start up projects with a budget over US$ 12,122 (Rs. 10 Lakh) in the manufacturing sector and over US$ 6,061 (Rs. 5 Lakh) in the service sector.
• Only new projects that have been officially approved under the PMEGP are eligible for assistance under the scheme.
• Existing units (under PMRY, REGP, or any other Government of India or state government scheme) and units that have already accessed government subsidies under any other government of India or state government scheme are not eligible.
• Term loan projects without Capital Expenditure are not eligible.
• Land expenditures cannot be included in the project budget.
• Applications from both rural and urban regions can be processed by all implementing agencies (KVIC, KVIB, DIC, and Coir Board).
• The candidate must possess a valid Aadhaar Number.
• The applicant must consent to the authentication of demographic facts such as Aadhaar number, Name, Gender, Date of Birth, and Mobile number from the UIDAI server.

Steps for Online Application

• Make sure you are eligible.
• Verify and authenticate your Aadhaar details online.
• Generation of a User ID and Password, which will be provided by SMS to the applicant's registered mobile number.
• Log in to the PMEGP portal to enter more information.
• Upload the necessary files.
• Fill out the Score Card and double-check the information.
• Final Submission.
• Candidate can track the status of application form submission until final disbursement and adjustment of MM subsidy.

Financial Institutions

• All banks in the public sector.
• All regional rural banks, cooperative banks, and scheduled commercial banks in the private sector, which are under RBI regulation.
• Small Industries Development Bank of India (SIDBI)

Other Government Initiatives by KVIC

The following programmes are also being implemented by KVIC to offer opportunities for independent work in rural and underdeveloped areas:

• Honey Mission

Under this programme, bee boxes with bee colonies, toolkits, and training are given to farmers, Adivasis, and young individuals who reside in rural regions so they can become beekeepers and boost their income. Since its inception till December 31, 2022, a total of 1,84,739 Beehives (Boxes) with Bee Colonies have been supplied to 18,593 Beekeepers through the Honey Mission initiative.

• Kumhar Sashaktikaran Programme

Under this initiative, rural potters are offered new energy-efficient equipment such as Electric Pottery Wheels, Blungers, and more, along with training. A total of 24,410 Electric Pottery Wheels and associated equipment have been supplied to 24,410 Pottery craftsmen since its commencement in December 2022. This had a positive impact on 97,640 potters.

• Scheme of Fund for Regeneration of Traditional Industries (SFURTI)

This scheme aims to group traditional businesses and craftspeople into collectives and offer them stable employment by helping to buy better tools and materials and building Shared Facility Centres. It also provides training, design, marketing assistance, and more. Since 2014-15, 498 clusters have been recognised under SFURTI, with a Government outlay of US$ 156.61 million (Rs.1,292 crore), creating sustainable employment for about 2.94 lakh craftsmen.

• Micro and Small Enterprises-Cluster Development Programme (MSE-CDP)

This initiative aims to build Common Facility Centres, Infrastructure Development, and Flatted Factory Complexes by grouping 20 or more enterprises with similar value chains into clusters.

• Credit Guarantee Scheme for Micro and Small Enterprises (CGTMSE)

Under this government scheme, lending institutions offer new and current micro and small businesses, including retail operations, and collateral-free credit facilities (term loans and/or working capital). For credit up to US$ 242,440 (Rs. 2 crore), the guaranteed coverage offered under the CGTMSE ranges from 50% to 85%.

Present Scenario (Progress)
Since its beginning in 2008-09 and continuing till December 2022, a total of around 8.37 lakh micro firms have received a margin money subsidy of US$ 2.51 billion (Rs. 20,775 Crore), employing approximately 68.05 lakh people. During the fiscal year 2022-23, a target of 1,01,006 PMEGP units has been set, with a margin money subsidy of US$ 358.15 million (Rs. 2954.58 crores) disbursed, and an estimated 8.08 lakh people employed. In FY22-23, till November 2202, the highest number of margin money subsidy is disbursed in Uttar Pradesh amounting to US$ 26.37 million (Rs. 21,755.88 lakhs) followed by Jammu & Kashmir at US$ 19.96 million (Rs. 16,473.97 lakhs) and Gujrat at US$ 16.91 million (Rs. 13,955.12 lakhs).

As seen in the below chart, despite the ravages of COVID-19, the employment generated in the fiscal year 2022 was estimated at 8,25,752. Till January 2023, 55,499 business units were assisted, US$ 216.05 million (Rs. 1,78,231 lakhs)  margin money subsidy has been disbursed and 4,43,992 individuals are employed under PMEGP.  

Source: Press Information Bureau (PIB)
Note: * - Till January 2023.

The Road Ahead
The Indian economy has shown a positive growth trajectory in the number of microfinance loan disbursals and accelerated growth of employment opportunities, despite the global crisis. There are 6.3 crore MSMEs in the country which employ 11 crore people. MSME contributes more than one-third to India’s GDP and 48% of exports are via this sector. In Q3 FY 22-23, microfinance loan disbursals increased to US$ 9.44 billion (Rs. 77,877 crore) from the same period in the previous fiscal year US$ 7.92 (Rs. 65,392 crore). A total of 189 lakh loans in Q3 FY 22-23, up from 165 lakh in Q3 FY 21-22, indicating a higher ticket size of new loans. Production and sales of Village Industries Products during the FY22-23 (Provisional) are estimated at US$ 11.41 billion (Rs. 94,162.13 crores) and US$ 15.26 billion (Rs. 1,25,901.65 crore) as compared to US$ 9.90 billion (Rs. 81,731.62 crores) and US$ 13.37 billion (Rs. 1,10,363.51 crore) in 2021 - 22. Furthermore, according to the fourth phase of the Quarterly Employment Survey (QES) total employment in the nine selected industries was expected to be 3.2 crores from January to March 2022, over ten lakhs higher than the estimated employment in the first round of QES (April-June 2021). Due to the huge success of PMEGP, the government approved its continuation through the 15th Finance Commission cycle, or for a five-year period spanning 2021-22 to 2025-26.