Prime Minister's Employment Generation Programme - PMEGP

Ministry of Micro, Small and Medium Enterprises (MoMSME) has launched a new credit linked subsidy programme called Prime Minister’s Employment Generation Programme (PMEGP) on 61st anniversary of Indian Independence by merging the two schemes that were in operation till 31.03.2008 namely Prime Minister’s Rojgar Yojana (PMRY) and Rural Employment Generation Programme (REGP) for generation of employment opportunities through establishment of micro enterprises in rural as well as urban areas. PMEGP will be a central sector scheme to be administered by the Ministry of MSME.

2. The subsidy levels, the cost limit of projects or units that could be established under PMRY which was extended to rural areas as well in 1994-95, were quite low and unattractive compared to those available to the beneficiaries in REGP. While the maximum subsidy admissible was Rs.12500 and the maximum cost of project that could be established was Rs.5 lakh under PMRY, the maximum subsidy that was admissible was Rs.4 lakh and the maximum cost of project that could be established was Rs.25 lakh under REGP for a beneficiary belonging to General category. There were more attractive programmes for creation of self employment opportunities being operated by many State Governments. Recovery rates of loans under PMRY were also considerably less than those under REGP. PMEGP improves upon the subsidy levels and cost limits of projects compared to those available so far under PMRY and ensures that the attractiveness of REGP is not diluted in any way while simultaneously strengthening the selection process, implementation and monitoring mechanism.

3. The subsidy levels under PMEGP are as under:
Categories of beneficiaries under PMEGP

General
Owner’scontribution - 10%
Rate of Subsidy (of cost of Project)
Urban - 15%
Rural - 25%

Special (including SC/ STs/ OBCs/ Minorities/ Women, Ex-servicemen, Physically Handicapped, NER, Hill and Border Areas)
Owner’scontribution - 05%
Rate of Subsidy (of cost of Project)
Urban - 25%
Rural - 35%

4. The upper limit of the cost of project that could be setup in the manufacturing sector is Rs.25 lakh while that in the business/service sector is Rs.10 lakh. There are no ceiling limits of annual income in respect of beneficiaries while a minimum educational qualification of VIII standard pass will be required for beneficiaries in respect of projects costing more than Rs.10 lakh in manufacturing sector and more than Rs.5 lakh in business/service sector. The beneficiaries would be identified, inter alia, with the help of Panchayats, Special Awareness Camps and will be provided with a mandatory Entrepreneurship Development Programme (EDP) training of a duration of two to three weeks. The scheme envisages electronic tracking of applications, 100 per cent verification of projects/units that will be established and model project profiles have been updated in association with banks. The scheme will be implemented at the national level through Khadi and Village Industries Commission (KVIC), an organization created under an Act of Parliament reporting to MoMSME which will place the funds of Government subsidy with the participating banks which in turn will disburse the same to the beneficiaries on receipt of applications and their own contribution ‘upfront’ in accordance with the guidelines of the scheme.

5. While KVIC has been given the overall responsibility for implementing PMEGP at the national level, it will directly do so in respect of the targets for rural areas, as defined in the KVIC Act, through its State Offices and State Khadi and Village Industries Boards (KVIBs). Implementation of PMEGP in urban areas and other rural areas will be done through the State Governments {District Industries Centres (DICs)}. The newly introduced Rajiv Gandhi Udyami Mitra Yojana of MoMSME can also be tapped for providing handholding support to the beneficiaries under PMEGP.

6. Budget Estimates 2008-09 have provided Rs.823 crore for PMEGP which includes Rs.83 crore towards Backward and Forward linkages including EDP training, publicity, marketing support, e-tracking of applications, physical verification of projects and so on. An estimated 6.17 lakh additional employment opportunities are targeted to be generated in 2008-09. The estimated total outlay for subsidy under PMEGP is Rs.4485 crore in addition to Rs.250 crore earmarked for providing Backward and Forward linkages to the micro enterprises between 2008-09 to 2011-2012 leading to an estimated generation of around 37.38 lakh additional employment opportunities. The scheme will be got independently reviewed after two years of its implementation.