Prime Minister Employment Generation Programme

Objective :

To generate employment opportunities through setting up of new self-employment ventures / projects /micro enterprises.

To provide continuous and sustainable employment to rural and urban unemployed youth, so as to help arrest migration of rural youth to urban areas

To increase the wage earning capacity of artisans.

GoI introduced Prime Minister’s Employment Generation Programme (PMEGP) by merging two schemes 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.

Guidelines:

PMEGP scheme is a central sector scheme administered by the Ministry of Micro, Small and Medium Enterprises (MSME).
 
The Scheme is implemented by Khadi and Village Industries Commission (KVIC) at the National level

At State level, the Scheme is implemented through State KVIC Directorates, State Khadi and Village Industries Board (KVIB) and District Industries Centre (DIC) and banks.

GoI has introduced online portal for processing of PMEGP applications and administering of Margin money with effect from 01.07.2016

Eligibility Criteria:

Any individual, above 18 years of age

No income ceiling for assistance for setting up projects under PMEGP.

Education qualification – Minimum 8th Std Pass for projects costing Rs.10 lakhs and above in manufacturing sector and above Rs. 5 lakh in business /service sector.

Assistance under the Scheme is available for new projects only.

Existing Units and the units that have already availed subsidy are not eligible.

Quantum and Nature of Finance:

Bank loan – General category - 90% of project cost and special category – 95% of project cost.

Project cost includes  capital expenditure and one cycle of working capital.

Bank finance is extended as term loan for capital expenditure and cash credit for Working Capital.

Projects without capital expenditure are not eligible for financing.

Projects costing more than Rs.5 lakhs which do not require working capital, need clearance from the controlling office of the Bank branch.

Cost of the land should not be included in the project cost.

Repayment schedule may range between 3 to 7 years with initial moratorium as required for the project

Quantum and Subsidy:

Categories of beneficiaries under PMEGP

Beneficiary’s contribution (of project cost)

Rate of subsidy

   

Urban

Rural

General

10%

15%

25%

Special

  (SC/ST/ OBCs / Minorities/Women/Ex- servicemen/Physically Handicapped /North Eastern Region /Hill and Border Areas

05%

25%

35%

Manufacturing Sector -  Maximum cost of the project/unit admissible is Rs. 25 lakh.

Service Sector - Maximum cost of the project/unit admissible is Rs. 10 lakh.

 

Identification of Beneficiaries:

At District level by a Task Force consisting of representatives from KVIC/KVIB/DIC and  Banks, headed by Deputy Commissioner/ Collector concerned.

Entrepreneurship Development Programme (EDP) training is compulsory before release of first installment of loan.

EDP training is reduced to three days for projects upto Rs.2 lakhs for service enterprises.

100% physical verification to ensure setting up of the unit as well to ascertain creation of additional employment.

 

Release of Margin Money:

KVIC has  introduced  online portal  for processing and release of margin money  subsidy

Margin money subsidy received to be kept in separate SB account (SB 199) and linked to the loan account, without payment of interest on the SB and also without charging interest on the corresponding loan amount.

Margin money shall be released/adjusted  to loan after three years of lock in period.

Margin Money (subsidy) will be ‘one time assistance’ and will not be available for expansion / modernization of the project  or existing units

 

Adjustment of Margin Money:

Margin money will be adjusted after receipt of satisfactory physical verification report from KVIC / KVIB / DIC.

In case, Bank’s advance goes ‘bad’ before three year period, due to reasons beyond the control of the beneficiary, Margin Money (subsidy) will be adjusted to liquidate the loan liability of the borrower.

In case any recovery is effected subsequently by the Bank from any source whatsoever, such recovery will be utilized by the Bank for liquidating the outstanding dues first and surplus if any will be refunded to KVIC.

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