PMEGP – Prime Minister’s Employment Generation Programme

The Prime Minister's Employment Generation Programme (PMEGP) is a flagship credit-linked subsidy scheme, administered by the Ministry of Micro, Small and Medium Enterprises (MSME), Government of India. Launched in 2008, it was formed by merging two earlier schemes: the Prime Minister's Rojgar Yojana (PMRY) and the Rural Employment Generation Programme (REGP).

The core objective of PMEGP is to generate employment opportunities by facilitating the establishment of new self-employment ventures/projects/micro-enterprises in the non-farm sector across both rural and urban areas of the country.

Key Objectives:

• To create new self-employment opportunities for unemployed youth and traditional artisans.

• To provide continuous and sustainable employment to a large segment of traditional and prospective artisans and rural/urban unemployed youth, thereby helping to arrest migration of rural youth to urban areas.

• To increase the wage-earning capacity of artisans and contribute to the growth rate of rural and urban employment.

• To facilitate the participation of financial institutions in increasing credit flow to the micro-enterprise sector.

Key Features & Benefits:

1. Nature of Scheme: It is a credit-linked subsidy scheme, meaning a portion of the project cost is provided as a government subsidy (called Margin Money), and the rest is financed by banks as a term loan.

2. Implementing Agencies:

   • At the national level, the Khadi and Village Industries Commission (KVIC) acts as the single nodal agency.

   • At the state level, it's implemented through State KVIC Directorates, State Khadi and Village Industries Boards (KVIBs), and District Industries Centres (DICs). Coir Board also implements it for coir-related activities.

3. Maximum Project Cost:

   • Manufacturing Sector: Up to ₹50 Lakhs

   • Service/Business Sector: Up to ₹20 Lakhs

   • (Note: For upgradation/expansion of existing PMEGP/Mudra units, higher limits apply: up to ₹1 Crore for manufacturing and ₹25 Lakh for service/trading, with reduced subsidy rates.)

4. Beneficiary's Contribution (Own Contribution):

   • General Category: 10% of the project cost.

   • Special Categories: 5% of the project cost. (Special categories include SC, ST, OBC, Minorities, Women, Ex-Servicemen, Transgenders, Differently-abled, applicants from NER, Hill and Border areas, and Aspirational Districts).

5. Government Subsidy (Margin Money): The subsidy amount varies based on the beneficiary category and the project location:

   • General Category:

     • Urban Areas: 15% of the project cost

     • Rural Areas: 25% of the project cost

   • Special Categories:

     • Urban Areas: 25% of the project cost

     • Rural Areas: 35% of the project cost

   • The subsidy is kept as term deposit for 3 years, linked to the loan account, and then adjusted towards the loan.

6. Bank Finance: The balance amount of the total project cost (excluding the beneficiary's contribution and subsidy) is provided by participating banks as a term loan and working capital.

7. Collateral Security:

   • No collateral security is required for projects costing up to ₹10 Lakhs as per RBI guidelines.

   • Projects beyond ₹10 Lakhs can be covered under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme.

8. Repayment Period: The repayment tenure is typically between 3 to 7 years, after an initial moratorium period (usually 6 months to 2 years, depending on the project).

9. Negative List of Activities: Certain activities are not eligible for funding under PMEGP, including those related to meat processing, production/sale of intoxicants (like bidis, cigarettes, liquor), cultivation of crops (agriculture/horticulture/floriculture/sericulture), animal husbandry (though value addition is allowed), and manufacture of polythene carry bags below 20 microns.

10. Entrepreneurship Development Programme (EDP): Beneficiaries whose projects are sanctioned and loans are disbursed must undergo a mandatory EDP training for 10 working days (for projects above ₹5 Lakhs) or 6 working days (for projects up to ₹5 Lakhs) before the margin money claim is released. This training is generally free for PMEGP beneficiaries.

Eligibility Criteria for Beneficiaries:

• Age: Any individual above 18 years of age.

• Income Ceiling: There is no income ceiling for setting up projects.

• Educational Qualification: For projects costing above ₹10 Lakhs in the manufacturing sector and above ₹5 Lakhs in the business/service sector, the beneficiary must possess at least an VIII standard pass educational qualification.

• New Projects Only: Assistance under the scheme is available only for new projects sanctioned specifically under PMEGP.

• Exclusion: Existing units (under PMRY, REGP, or any other Central/State Government scheme) and units that have already availed government subsidies under any other scheme are NOT eligible.

• Family Limit: Only one person from one family (self and spouse) is eligible.

• Eligible Entities: Besides individuals, Self Help Groups (SHGs) (including those below the poverty line, provided they haven't availed benefits from other schemes), Institutions registered under the Societies Registration Act, 1860, Production Co-operative Societies, and Charitable Trusts are also eligible.

Application Process:

Applications for PMEGP are primarily submitted online through the PMEGP e-Portal (kviconline.gov.in/pmegpeportal). The process generally involves:

1. Online Registration: Registering on the portal.

2. Application Form: Filling out the detailed online application form.

3. Document Upload: Uploading necessary documents, including a detailed project report (DPR), identity proof, caste/special category certificate (if applicable), education qualification proof, etc.

4. Agency Selection: Selecting the preferred implementing agency (KVIC/KVIB/DIC).

5. Interview & Appraisal: Shortlisted applicants may be called for an interview and their project proposals appraised by the District Level Task Force Committee (DLTFC).

6. Bank Sanction: The application is forwarded to banks for loan sanction.

7. EDP Training: Upon loan sanction, the beneficiary undergoes mandatory EDP training.

8. Disbursement & Monitoring: Loan is disbursed by the bank, and the subsidy is released. Projects are subject to physical verification and monitoring by implementing agencies.

PMEGP is a crucial initiative for promoting entrepreneurship and creating grassroots employment, especially in semi-urban and rural areas, by making credit and financial incentives accessible to aspiring micro-entrepreneurs.