Features
Generating long-term employment opportunities for the unemployed and artisans across rural and urban India.
Prime Minister’s Employment Generation Programme (PMEGP) is a credit-linked subsidy programme managed by the Ministry of Micro, Small and Medium Enterprises. The programme is implemented by the nodal agency, Khadi and Village Industry Commission (KVIC), with Khadi and Village Industry Boards and District Industries Centres implementing it at state and grassroots levels.
The PM Rojgar Yojana (PMRY) and Rural Employment Guarantee Programme (REGP) were merged in 2008 and were given the shape of the PMEGP scheme. The scheme is presently in operation till 2025-26 and is expected to generate over 40 lakh long-term employment possibilities. PMEGP aims to generate non-agricultural micro-business opportunities for youths across the country.
Key features of the PMEGP scheme
- The maximum cost of a unit or project under this scheme is ₹50 lakh in the manufacturing sector and ₹20 lakh in the business/service sector. The remaining portion of the cost can be provided by the lending institution as a regular loan.
- The beneficiary contribution required under the scheme is 10% in the case of general category applicants. The PMEGP subsidy provided is 15% in urban areas and 25% in rural areas.
- The beneficiary contribution is 5% for special category - SC/ST/OBC/Minorities/Women, ex-servicemen, physically handicapped, northeast region, hill and border areas, etc. The subsidy provided for these special categories is 25% in urban areas and 35% in rural areas.
- Enjoy PMEGP for the new entrepreneurs in CGTMSE guarantee cover.
- Capital expenditure and one cycle of working capital can be included in the project cost.
- The cost of land cannot be a part of the project cost. The cost of a ready-built, leased or rented workshop/shed can be included for a maximum of three years only.
- Only one person from a family is eligible for the PMEGP scheme; the family being self and spouse.
- The repayment schedule can be between three and seven years after any moratorium period provided by the bank.
- The PGEMP loan interest rate will be as per the lending institution’s terms and conditions.
Why is PMEGP important?
PMEGP plays a crucial role in setting up new self-employment businesses in urban and rural areas. This is aimed at supporting unemployed youths and traditional artisans. Being a project-based support, it can create sustainable employment avenues and increase the earning capacity in rural and urban centres. The scheme can also address the mass migration of the rural population to urban areas by incentivising rural projects with higher subsidies.
Benefits of PMEGP
PMEGP has been beneficial in the following aspects:
- Versatile business finance - PMEGP covers cash credit to meet working capital needs and term loans to address the capex requirement of the business. The CGTMSE credit guarantee relieves the borrower from collateral requirements.
- Subsidy and security - Subsidy ranging from 15% to 35% of the project cost - for projects up to ₹50 lakh in the manufacturing sector and ₹20 lakh in the service sector - is available under the scheme. This eases the repayment pressure on the borrower. Borrowing is also made easy through relaxed collateral requirements.
- Marketing support - Depending on quality, price and other factors, the PMEGP unit products may be marketed in KVIC’s marketing sales outlets. KVIC also arranges exhibitions, district/state/zonal/national/international level workshops, buyer-seller meets, etc., to put the spotlight on the PMEGP beneficiaries.
- Localised employment - With PMEGP’s focus on supporting rural areas and artisanal talents, interested borrowers can explore self-employment opportunities locally. This reduces the mass inertia of having to move to an urban centre for employment.
Eligibility and documentation required for the PMEGP scheme
The eligibility requirements for PMEGP are:
- The applicant must be an individual above 18 years of age
- No educational qualification is required for projects costing up to 10 lakh for manufacturing and up to ₹5 lakh for service sector
- VIII standard education qualification is mandatory for projects costing more than ₹10 lakh in the manufacturing sector and ₹5 lakh in the business or service sector
- Only new projects sanctioned under PMEGP are eligible for the scheme
Apart from individuals, the following entities are eligible for PMEGP:
- Self-help groups (SHGs)
- Self-help groups from the BPL category, provided the SHG is not availing of the benefits of any other scheme
- Institutions registered under the Societies Registration Act, 1860
- Production Co-operative Societies
- Charitable trusts
Existing units under PMRY, REGP or other government schemes, and units that have availed of government subsidy under any other state or central government scheme are not eligible for PMEGP.
Documents required for availing of the PMEGP scheme are:
- Aadhaar card, PAN card
- Caste certificate
- Special category certificate, wherever required
- Rural area certificate
- Project report
- Education/EDP/Skill Development training certificate.
- Any other documents can also be requested on a case-to-case basis.
In the case of institutions, self-attested copies of the following are also required:
- Registration certificate
- Authorization letter/copy of bye-laws authorizing secretary, etc., to apply
- Certificate for special category, wherever required