Prime Minister’s Employment Generation Programme (PMEGP) is a credit-linked subsidy programme introduced by the government of India in 2008. PMEGP is a merger of two schemes, namely, Prime Minister’s Rojgar Yojna and Rural Employment Generation Programme. This program focuses on generating self-employment opportunities through micro-enterprise establishments in the non-farm sector by helping unemployed youth and traditional artisans.
The Ministry of MSME administers the Prime Minister’s Employment Generation Programme (PMEGP). The PMEGP Scheme is being implemented by Khadi and Village Industries Commission (KVIC) at the national level. At the State level, the Scheme is being implemented through State Khadi and Village Industries Commission Directorates, State Khadi and Village Industries Boards and District Industries Centres and banks.
1.Objectives of Prime Minister’s Employment Generation Programme
- Generation of sustainable and continuous self-employment opportunities in urban and rural areas of the country
- Providing sustainable and continuous employment to a large segment of rural and urban unemployed youth, traditional and prospective artisans through the establishment of micro-enterprises
- Facilitating the financial institution’s participation for higher credit flow to the micro sector
- Individuals with age of 18 years or more
- Passing standard VIII is required for a project above Rs 5 lakh in the service sector and above Rs 10 lakh in the manufacturing sector
- Institutions registered under Societies Registration Act- 1860
- Production based co-operative societies
- Self-help groups and charitable trust
3.Salient features of the scheme
- The Scheme is implemented through 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 the ratio of 30:30:40 between Khadi and Village Industries Commission / Khadi and Village Industries Boards / DIC respectively
- Assistance under the PMEGP is only available to new units that are to be established
- There is no income ceiling for setting up projects
- Existing units or units that are already availing any government subsidy (State or Central) are ineligible
- Any industry including coir based projects (excluding those mentioned in the negative list) can take advantage of this scheme
- The per capita investment under the scheme should not exceed Rs 1 lakh in plain areas and Rs 1.5 lakh in hilly areas.
- Maximum project cost Rs 10 lakh in the service sector and Rs 25 lakh in the manufacturing sector is this limit.
4.Areas of Operation
Rural area, as stated under Khadi and Village Industries Commission Act 2006 – Scheme, means the area comprised in any village and includes the area comprised in any town. The population should not exceed twenty thousand or such other figure as the Central Government may specify from time to time.
In the urban area, only District Industries Centres (DIC) are included.
5.Negative list of activities
- Businesses / Industries connected with processing/productions/sale of meat or intoxicant items like pan/beedi/cigarette etc.
- Businesses/ Industries linked with sericulture, cultivation, floriculture, horticulture.
- Manufacture of containers of recycled plastic/polythene carry bags of less than 20 microns
- Processing of pashmina wool and other products which involves hand spinning and hand weaving which comes under the purview of Khadi Certification Rule.
- Rural transport (except houseboat, shikara, tourist boat in Andaman & Nicobar Islands and in Jammu & Kashmir, auto rickshaw and cycle rickshaw.)
CNG auto rickshaw will be permitted only in Andaman & Nicobar Islands and North Eastern Region of the country with the prior approval of Chief Secretary of the State on merit.
The margin money contribution is 5% of the cost of the project for special category borrowers and 10% for General category borrowers.
Illustration: Suppose Miss Nishitha applies to XYZ bank for Rs 8 lakh loan, the bank might finance only 80% of the loan amount (ie Rs 6,40,000/-). The balance 20% (ie Rs 1,60,000/-) is called as margin money and Nishita has to make arrangements for the same.
- General Category: The eligible subsidy is 25% of the cost of the project in rural areas and 15% in urban areas.
- Special Category: The eligible subsidy is 35% of the cost of the project in rural areas and 25% in urban areas.
8.Quantum of margin money subsidy
|Categories of beneficiaries under PMEGP||Beneficiary’s own contribution (of project cost)||Rate of Subsidy|
|Special Category (including SC/ST/OBC /Minorities/ Women, Ex-Servicemen, Physically handicapped, NER, Hill, and Border areas etc)||5%||25%||35%|
9.How does this scheme work?
Let’s assume Mr. Don, a young new entrepreneur from Bangalore Urban, wants to apply for the PMEGP scheme
Estimated Project Cost – Rs 10 lakh
Mr. Don’s Contribution (Mandatory as per PMEGP) – Rs 1 lakh (10% of Rs 10 lakh)
Amount Received By Mr. Don – Rs 9 lakh
Note: The margin money (ie 15% of the Project Cost – Rs 1,50,000/-) generally withheld by the bank will be reimbursed to the bank by KVIC within 24 hours of acceptance of the PMEGP application. Hence, entrepreneurs like Mr. Don can get the required capital to proceed with their venture very easily/
- Banks will finance capital expenditure in the form of a term loan and working capital in the form of cash credit. Projects can also be financed in the form of composite loan consisting of capital expenditure and working capital
- The bank credit will be ranging between 60-75% of the cost after deducting (Margin Money) subsidy and the owner’s contribution.
- Though banks will claim subsidy on the basis of the projections of capital expenditure mentioned in the project report, Margin Money can be availed only on the actual availment of capital expenditure and excess if any, is to be refunded to KVIC
- Working Capital component should be utilized in such a manner that at one point it should touch 100% limit of the cash credit within 3 years of the lock-in period of margin money and not less than 75% utilization of the sanctioned limit.
10.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.
14.Procedure or applying at PMEGP e-portal
Now, click on “Online Application Form For Individual” to fill the application form.
Then PMEGP Application Form will be then visible here.
Guidelines for filling the Online PMEGP Application for an Individual Applicant
|1||Aadhaar Number -12 digit Aadhaar number of the applicant|
|2||Name of Applicant - As per Aadhar Card|
|3||Sponsoring Agency - Agency where the application is to be submitted|
|4||State and District|
|6||Gender and Date of Birth (DD-MM-YYYY)|
|7||Select whether Social Category (General Category) / Special Category|
|8||Educational Qualification :|
|( 8th Pass, Under 8th, 10th Pass, 12th Pass, Graduate, Post Graduate, Ph.D., Diploma)|
|9||Address for Communication: The Applicant should fill the complete postal address of the applicant including State, District, Pin Code, Mobile No., Email and PAN No.|
|10||Unit Location : Select Unit Location (i.e. Rural OR Urban)|
|11||Proposed Unit Address : The Applicant should fill the complete Unit address of the unit including Taluka, District, Pin Code|
|12||Type of Activity: Select from the activity list (i.e. Service or Manufacturing)|
|13||Name of the Activity :|
|1. Industry: Select Industry from the List of Industry|
|2. Product Description: Type the specific product description.|
|14||Whether EDP Training Undergone : Select Yes Or No from the List|
|15||Training Institute's Name: If EDP Training Undergone YES, enter Training Institute Name in detail.|
|16||Loan Required :|
|1. Capital Expenditure: Enter CE loan in rupees.|
|2. Working Capital : Enter WC loan in rupees.|
|3. Total Loan: The total loan will be calculated by the system automatically.|
|17||Bank Details: Enter IFSC code|
|18||After entering the required information, click on “Save Applicant Data”|
|19||Upload the documents for final submission|
|20||After final submission, applicant ID and Password will be sent to the Registered Mobile No|
Here applicants seeking for registration have to fill all the required information and click the “Submit” button in order to complete the registration process.
At last, the registered candidates can log into the “PMEGP portal” and can fill the remaining form to complete the application process.